Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 15, 2016
Case Laws in this Newsletter:
Income Tax
Customs
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Highlights / Catch Notes
Income Tax
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A private complaint without any further investigation by the authorities surely not be a tangible material to enable the AO to form a belief that income chargeable to tax had escaped assessment - HC
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Direction of special audit u/s 142(2A) for the assessment year where assessment is not pending or without issuing SCN is not value - Direction for special audit only for the Assessment Year under consideration sustained - HC
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Consequent to amended provisions section 10B makes it clear that it is a deduction and not exemption, and the computation of income has to be in accordance with the provisions of the Act, therefore, not only profits but also losses from the business have to be taken into consideration while computing deduction u/s 10B - AT
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The amount of payment of interest are hire purchases cannot be characterized as interest payable and this provisions of Section 194A of the Act are not attracted in such transactions - AT
Customs
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Classification - Glyphosate Technical 95% - Paraquat dichloride 42% Technical - the import policy as issued by the DGFT read with the licences given to the appellant are to be considered for assessment of clearance of the goods in so for they related to the classification of the goods. - AT
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Valuation - transaction value - the royalty payment is includible in the assessable value of the goods. - AT
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Demand of SAD - Even though the sales tax was not charged from area from where the goods sold, such area shall not become non taxable territory to apply the proviso of Sr. 5 of the Notification No. 22/99-Cus - appellant entitled to claim exemption under notification no. 22/99-Cus - AT
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Confiscation of consignment - under-invoicing of import of Diamonds - Bill of Entry not accompanied with packing list - The element of mens-rea is only parameter to decide the quantum of fine and penalty - confiscation justified - quantum of fine and penalty reduced. - AT
Service Tax
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Business Auxiliary Service - appellant is running SUWIDHA (Single User-friendly Window Disposal and Help-line for Applicants) Centers at various towns of the district - for charging service tax, the service should not be in the nature of statutory duties of the government - AT
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The appellant is rendering services related to booking, preparation of bill, collection of realization by the appellant on behalf of the airlines which, in our view, would fall under the category of promotion and marketing of airline services - though service tax is leviable, demand set aside on the ground of period of limitation - AT
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Refund - cenvat credit - relevant date is the last day of the relevant quarter of receipt of FIRCs instead of the dates on which the FIRCs had been issued - AT
Central Excise
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The Gas Conversion Kits cleared by the respondent amounts to manufacture and squarely covered under the definition of Section 2 (f) of the Central Excise Act. - AT
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Valuation - amortization of the coast of dies/moulds - The value of the goods manufactured by the appellant should include the appropriate fraction of the cost of Dies/Moulds as it have been given in the explanation of Rule 6 - AT
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Whether the appellant being job worker i.e. manufacturer of body building is required pay automobile cess ? - there was no intention of the Administrative Ministry to levy cess on the activity of the body building. - AT
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Manufacture - refilling of Hydrogen gas cylinder - filling process - the activity undertaken by the appellant does not amount manufacture and the appellant is not liable to pay duty. - AT
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Classification - welded Wire Mesh - the goods in question are more appropriately classifiable as parts of poultry machinery falling within the scope of tariff Entry no. 84369100 - AT
Case Laws:
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Income Tax
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2016 (9) TMI 559
Reopening of assessment - complaint contained allegations of a private citizen [directors of the petitioner-company] - Held that:- What the Assistant Director communicated to the Assessing Officer in the present case was a private complaint making serious allegations of fraud and financial irregularities against the directors of the petitioner-company. Such allegations by itself would not make a valid ground to reopen the assessment unless coupled with some further reliable material. If the investigation wing had carried out any inquiry after receipt of such a private complaint, the contents thereof are not on record before us and at any rate, never brought to the notice of the Assessing Officer. Before the Assessing Officer there were only two documents. First was the said undated complaint inwarded in the department on 05.03.2008 and second was the covering letter of the Assistant Director of Income Tax (Investigation Wing) dated 28.03.2011 along with which the said private complaint was annexed. As noted, a private complaint without any further investigation by the authorities surely not be a tangible material to enable the Assessing authority to form a belief that income chargeable to tax had escaped assessment. Letter of Assistant Director (Investigation) also did not contain any further material regarding the allegations made by the complainant. In the said letter, he merely brought to the notice of the Assessing Officer that during investigation in connection with the said complaint against Shri Jugal M. Biyani and Shri Rajesh R Bansal, it was found that there were allegations of the assessee-company having claimed undue rebates from the Central Excise department. This letter was addressed on 28.03.2011. Notice under Section 148 of the Act was getting time barred on 31.03.2011. The Assessing Officer was, therefore, under time pressure. He mechanically issued the notice for reopening relying on these two documents. Neither of these two documents contained any material regarding the irregularities of the assessee-company. The complaint contained allegations of a private citizen. The letter of the Assistant Director contained no further information on the issue of reliability of the allegations made in the complaint. Though this letter referred to some findings concerning the assessee during the investigation into the complaint, no such material was placed at the disposal of the Assessing Officer. Assessing Officer stressed the need to verify the accounts of the assessee. In the affidavit in reply filed in this petition also, similar stand was taken by the Assessing Officer while stating that on basis of said information, the detail verification in this regard is absolutely necessary to find out the possibility of escapement of income for the assessment year 2004-05. There is a possibility of a nexus between the petitioner, its directors and other firms to systematically earn hidden income by claiming rebate from the Central Excise Department and evade their liability to pay income tax. All along therefore, the Assessing Officer desired to reopen the assessment to verify whether there had been evasion of tax, surely a purpose for which, the power of reopening cannot be resorted to. - Decided in favour of assessee
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2016 (9) TMI 558
Special audit - SCN for why for the financial year 2012-13, relevant to assessment year 2013-14 accounts of the petitioner not be audited by an accountant as defined under section 288(2) of the Act - Held that:- Insofar as the direction for auditing the company's account for the assessment year 2012-13, we see the same is backed by proper materials on record and reasons recorded by the Assessing Officer. Even during the course of the assessment, multiple queries had exchanged between the Assessing Officer and the assessee concerning the accounts of the assessee. It was eventually that the Assessing Officer was prompted to issue notice dated 08.03.2016. His formation of the belief that looking to the complexity and volume of the accounts, a special audit was called for, therefore, cannot be faulted. The matter however does not rest here. In the impugned order, he expanded the scope of special audit and directed the special audit not only for the financial year 2009-10 in case of the assessee, but also called for special audit of various other entities for number of years. This, in our opinion, was simply impermissible. We are doubtful whether while processing the return of an assessee for a particular year, in exercise of powers under section 142(2A) of the Act, the Assessing Officer can call for special audit of a financial year other than one which is relevant to the assessment year in question. In any case, no such direction could have been issued without any proposal in the show cause notice. We may recall the only proposal in the show cause notice was that the Assessing Officer upon failure of the assessee to satisfy him otherwise, would call for special audit for the financial year 2012-13. There was no further proposal that he may expand the scope of special audit for any other years as well. His recording of background facts of multiple transactions in earlier years, must be seen as demonstrating the nature of complexity in accounts and without there being any specific proposal in this respect, cannot be read as giving a reasonable opportunity to the petitioner to oppose why special audit for other years should not be called for. Same logic would apply in respect of the direction for special audit in case of other entities. Here also, admittedly there was no proposal in the show cause notice. If the case of the Revenue is that, such entities having merged, it is the petitioner alone who would respond to any proposal for the special audit in respect to such entities, there is no such indication in the show cause notice and at any rate, no proposal for special audit in respect of such entities. The direction contained in the impugned order concerning the special audit in case of the petitioner for the finnacial year 2012-13 being severable, can be saved. - Direction for audit for other assessment years quashed - Decided partly in favor of assessee.
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2016 (9) TMI 557
Deduction claimed u/s 10B - whether loss from non-eligible unit can be set off against the profit of eligible unit or whether only profit of eligible unit is to be considered for computation of deduction u/s 10B? - Held that:- Deduction u/s 10A/10B, has to be given effect at the stage of computing the profit & gains of the business under the head ‘income from business or profession’ which shall be arrived at after adjusting loss of ineligible unit with the profit of the eligible unit i.e. giving effect to the provisions of Section 70 and 71 of the Act. Consequent to amended provisions section 10B makes it clear that it is a deduction and not exemption , and the computation of income has to be in accordance with the provisions of the Act, therefore, not only profits but also losses from the business have to be taken into consideration while computing deduction u/s 10B of the Act. Thus, it is held that losses incurred in the non-eligible business by the assessee are to be set off against the profit of eligible units of the assessee to arrive at the deduction u/s 10B of the Act - Decided in favour of revenue
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2016 (9) TMI 556
Disallowance of advertising and publicity expenses - Held that:- We may point out that the lack of financial resources for conduct of business and major income or low income by the payee cannot be a basis for making disallowance as to basis of doubt only. The payee is a tax payer and if he left the earlier place of business then he may be called from new address to explain his position and in the extent of return of notice unserved on the old address can be obtained from the payer assessee to establish its claim. We are of the considered opinion that the CIT(A) upheld the addition on wrong premise and by considering the irrelevant facts and thus we decline to accept conclusion drawn in the first appellate order. At the same time, from the explanation and documents filed by the assessee we clearly observe that the assessee submitted all relevant documents, evidence and explanation within his control to establish its claim and by showing that the payee M/s Vision and Images received payment through banking channels towards bills raised for logo and wall painting which is nothing but actual advertisement and publics expenses. The DR did not take the assessee to submit new address of the payee thus addition cannot be made only because notice u/s 133(b) of the Act could not be served upon the assessee due the reasons beyond control. We may also point out that 10 years have been elapsed after transaction thus at this stage we cannot expect the assessee to submit more evidence s to support its claim which is suffice to establish genuineness of the claim which was incorrectly disallowed by the authorities , in view of above discussion, we demolish the conclusion of the CIT(A) and we direct the A.O to allow the claim of the assessee. Disallowance of interest paid by the assessee to M/s GE Capital TFL - Held that:- On careful consideration of the same we are of the considered opinion that as per CBDT, vide Instruction NO. 1425/CBDT dated 16/11/87 the amount of payment of interest are hire purchases cannot be characterized as interest payable and this provisions of Section 194A of the Act are not attracted in such transactions
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2016 (9) TMI 555
Petition challenging the order of the Commission under the writ jurisdiction - settlement commission - whether the impugned order passed by the Commission has reached its finality? - Held that:- We are convinced that the Commission, after giving appropriate opportunity to the applicant and after going through the report of the Principal Commissioner/Commissioner made under Rule-9, has passed the order under Section 245D of the Act. Section 245D(3) of the Act has empowered the Commission to make inquiry/investigation further to find out the additional income. Commission has got the power to compute the aggregate income of the assessee by adding the additional income to determine the liability of the assessee towards tax, penalty and interest and also the Commission under Section 245F(I) of the Act has all the powers vested in the Income Tax Authority under the Act. So the allegation of the petitioner that the Commissioner made additional income of approximately ₹ 110 crores added finding thereby that there is no true and full disclosure income is untenable because the Commission has got not only power to decide the lis before them but also to find out if at all any income left out or could not be disclosed by the assessee to come to a mechanism of settlement. The settlement of lis is not only covered by the dispute arose before them but also for the dispute yet to come. So the Commission has got wide power to consider the income disclosed, add additional income after due investigation and also to add any income which is found to be valid as per report under Rule-9 submitted by the Department and finally settle the tax payable by the assessee. Where there is a term of settlement including demand by way of tax, penalty or interest and such payment has been made, but subsequently found by the Settlement Commission that it has been obtained by fraud and misrepresentation, the Commission has power to declare the said settlement as void. When the order of the Commission has been communicated to the Department, the Department could have agitated before the Commission to declare the same as void but instead as appears from the arguments of both sides that in terms of the settlement, the Assessing Officer has been directed to compute the tax as per law and charge the interest as directed at Para-7 of the report of the Commission and the applicant seeks direction to make payment and in fact it is admitted by the assessee that they have paid the tax as per terms of settlement. From the aforesaid provisions under Section 6 of the Act, while passing the order under Sub-section-4, the Commission can pass the order for settlement including the terms with regard to tax, penalty or interest to be paid under the settlement and in that order, it must be also maintained that if subsequently it is found by the Settlement Commission that the order has been obtained by fraud or misrepresentation, the Commission has the power to declare the settlement void. Where the settlement is found to be void as per sub-section 6 of the Act, all the proceedings would be heard de novo and the Commission has to complete the proceedings within a period of two years from the date of the final order in which the settlement became void. In the instant case, when the tax under Sub-section-6A of the Act has been paid by the assessee as per the demand by the Assessing Officer in consequence of the order of the Commission, it appears that the Commission has not found the order void obtained by fraud or misrepresentation. By reading the provision of Sub-section 6, 6A, 6B and 7, we are of the view that the Commission has got statutory power to implement, vary, modify and rectify its own order. So the Settlement Commission is self-regulatory body having all powers of adjudication and conciliation. Thus to concluded Commission has passed the order which has become conclusive and reached its finality and the same has already been implemented by collecting tax from the assessee-opposite parties 2 to 6 and the writ jurisdiction is not maintainable in view of the reasons as stated above
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2016 (9) TMI 554
Revision u/s 263 - Held that:- It is a settled position of law that the Commissioner of Income Tax can exercise his power under Section 263 of the Act only on satisfaction of twin conditions i.e. the order being erroneous and also prejudicial to the interest of the Revenue. In the present facts, the view taken by the Assessing Officer on detailed examination of the issues, as is evident from the questionnaire posed to the respondent assessee and the response thereto during the assessment proceedings, on facts is a possible view. The view taken by the Assessing Officer does not became erroneous merely because the view of the Commissioner of Income Tax is different from the view taken by the Assessing Officer. In this case, moreover it is evident from the order dated 28th August, 2011 of the Commissioner of Income Tax that enquiry into both the issues were conducted by the Assessing Officer before passing the assessment order dated 28th October, 2009. Thus, it is not a case of no enquiry which could make the order erroneous. An inadequate enquiry would not make the assessment order vulnerable as being erroneous. The view taken by the Assessing Officer is a possible view and nothing has been shown to us which would even remotely suggest that the conclusion reached by the Assessing Officer was perverse and / or arbitrary on the basis of the evidence available before him. No substantial question of law
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2016 (9) TMI 553
Addition u/s 14A - Discharge of the burden that interest free fund far exceeds the value of investment - Held that:- The burden is upon the assessee to show and prove that interest free fund far exceeds the value of investment and thereafter, to justify the quantification of amount of ₹ 4 lakhs towards disallowance for the exempted income. In the present case, the said burden has not been discharged satisfactorily and thereafter, the assessing officer has proceeded to apply the formula provided under Section 8D(2)(iii) read with Section 14-A of the Act. Discharge of the burden is essentially a question of fact. The authority up to the level of Tribunal has recorded finding of fact for non-discharge of burden by appellant-asses see. So far as applicability of Section 14-A read Rule 8D(2)(iii) is concerned when the assessee has failed to discharge the burden of proving quantification of the amount for disallowance towards exempted income, there would be hardly any scope for consideration of the matter as any substantial questions of law. The aforesaid is coupled with the aspects as referred by us hereinabove that the finding of fact for non-discharge of the burden which is upto the level of the Tribunal which is the ultimate fact finding authority, has remained final. The finding of fact in our view is outside the scope of judicial scrutiny in the present appeal. Thus we find that the decision upon which the reliance has been placed is of no help because the assessee in the present case has not been able to prove that the interest free fund far exceeded the value of investment and further if such was the position, there was no question of disallowance but in the present case, even as per the assessee, the amount of ₹ 4 lakhs was quantified.
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2016 (9) TMI 552
Addition u/s 14A - Held that:- Rule 8D (iii) clearly postulates that in the calculation of the disallowance amount, “an amount equal to one - half percent of the value of the investment, income from which does not or shall not form part of the total income.” should be taken into consideration. Thus, it is not all investment but only that which is expressly spelt out in Rule 8D (iii) which is to be reckoned for the purpose of calculation of average of half percent. Having regard to these circumstances, we are of the opinion that no question of law arises.
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2016 (9) TMI 551
TDS u/s 194J - non deduction of tds - payments of transmission charge - mandating deduction of tax at source - Held that:- We answer the substantial question of law raised, in favour of the assessee and against the revenue by saying that the provisions of Section 194J of the Act was not attracted in present case and the assessee was not liable to deduct the tax at source from the payments of transmission charge made by it to the KPTCL and SLDC and therefore, the additions made by the assessing authority in the returned income of the assessee on this account were rightly set aside by the Income Tax Appellate Tribunal.
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2016 (9) TMI 550
Addition household expenses and deposit in PPF account - Held that:- In the present case, the contention of the assessee that his wife alongwith his son was residing with his father-in-law who was a retired railway official and spending the money for household expenses has not been rebutted. The assessee also explained that his son was pursuing B.com from Government College, Kalka and nominal course fee was amounting to ₹ 3,000 p.a. The assessee had shown the household expenses in his wife and son at ₹ 48,000/- which appears to be reasonable because the other expenses relating to kitchen and miscellaneous expenses were met out by her father who was a retired railway officer. The assessee was living alone at his work place in Sonepat and was getting the breakfast and lunch from the canteen of the company where he was working. Therefore, the expenses amounting to ₹ 60,000/- for his household needs appear to be reasonable. The assessee also explained before the ld. CIT(A) that a rent of ₹ 1,44,000/- was paid and an amount of ₹ 70,000/- was deposited in his PPF account. Another sum of ₹ 8,712/- was paid to M/s Navin Chand Navin Kumar. In this manner, total household expenses were shown at ₹ 3,30,712/-. The assessee also explained the total funds amounting to ₹ 3,77,000/- were available with him, therefore, the addition made by the AO and sustained by the ld. CIT(A) on account of household expenses and deposit in PPF account was not justified
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2016 (9) TMI 549
Addition made u/s 40A(2) - payment of salary to assessee’s daughter-in-law - Held that:- We find that Smt. Seema Bhandari, daughter-in-law of the assessee has been working with the assessee for the financial year 2007-08 onwards. She was paid remuneration at ₹ 4.60 lakhs in the immediately preceding year, but during the year under consideration the increase in remuneration was by 350%, although it is the contention of the ld. Authorized Representative of the assessee that increase in remuneration is due to the services of Smt.Bhandari, which were utilized as part of succession planning in the business due to old age of the assessee and she was also actively working as Chief Executive Officer for the business. We have also noted that she is also paying tax @ 30%. Therefore, there appears no evasion of tax by paying higher amount of remuneration. As in the case of Principal CIT vs. Gujarat Gas Financial Services Limited, (2015 (7) TMI 743 - GUJARAT HIGH COURT) wherein it was held that where the recipient company as well as parent company, both are assessed to income tax at maximum marginal rate and, therefore, it cannot be said that the service charges is paid to the recipient company at unreasonable rate to evade income tax. It was also noted therein that so far as the Circular dated 06.07.1968 is concerned, it makes clear that the provisions of Section 40A(2) and particularly with regard to the transaction between the relatives and associates is concerned, the same shall be treated as bona fide case unless the Officer finds it that one of them is trying to evade payment of tax. In the light of these decisions, we find that the assessee as well as his daughter in law are being assessed at the maximum marginal rate and, therefore, there appears no ground for tax evasion. However, we are also aware of the fact that increase in the turnover at 30% was same as in the increase of turnover of 30% during the preceding year. Therefore, increase in the remuneration @ 350% appears to be on higher side. Considering the nature of services rendered by Smt. Seema Bhandari and increase in turnover due to her efforts, it would be reasonable to consider a sum of ₹ 1 lac per month as reasonable. Therefore, disallowance of ₹ 20,70,833/- (-) 12,00,000/- = ₹ 8,70,833/- is confirmed and balance is deleted. Disallowance of the entire amount spent on FOC (Free of Cost ) - Held that:- We find that the FOC were given to the non-related party on account of accessories supplied free of cost alongwith the machinery items for which details were filed before the CIT(A) as mentioned above. We also observe that in subsequent assessment year 2013-14 of which assessment was made u/s 143(3) on 16.11.2015. The payment of such FOC amounting to ₹ 9,04,307/-was accepted and no disallowance on the same score has been made. This is the business expenditure, which has been incurred by the assessee by way of adopting sales promotion increase tactics, the genuineness of which has not been doubted by the lower authorities. Therefore, in all fairness, we are of the considered opinion that disallowance of such expenses is not desirable. Accordingly, the disallowance is deleted. Appeal decided partly in favour of assessee
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2016 (9) TMI 548
Penalty U/s 158BFA(2) - CIT(A) held that the penalty is leviable on total undisclosed income determined by the A.O.in excess of that declared by the A.O.in its block assessment return - reasonable cause for making the payment of taxes on the returned income Held that:- The assessee was caused to pay tax of ₹ 12 lacs on the disclosed income of ₹ 20,00,000/- the assessee could pay ₹ 5 lacs and there was a shortage of ₹ 7 lacs. The assessee contended that it has unrealized loans and advances whose recovery has been restrained by the Department. In other words they were attached. Therefore, assessee could not recover these amounts. Along with the return filed in a letter prayed for recovery of these amounts and adjustments against the tax liability but no such action was carried out at the end of the Department. Thus the assessee contended that it has a reasonable cause for not making payment of taxes in the returned income. Ld. first appellate authority has accepted the reasonable cause and deleted the penalty. Revenue is aggrieved on this part of ld. CIT(A)’s order. On due consideration of the record, we are of the view that once the assessee has loans and advances whose recovery was not in doubt and assessee applies to the Department either for recovery or uplifting of restrained orders and the Department did not take any action then it would be considered that assessee was prohibited by reasonable cause for making the payment of taxes on the returned income. Therefore, assessee does not deserve to be visited with penalty under the situation as contemplated under first proviso to section 158BFA(2) of the Act. As far as the penalty contemplated under the second proviso is concerned, the scheme of Chapter-14B provides that income of an assessee for the purpose of block assessment is to be determined on the basis of seized material found during the course of search. Assessing Officer would supply that material to the assessee and in response to notice u/s 158BC assessee has to compute true and disclose income out of the seized material for the purpose of block assessment. Now the question is, assessee has to compute ₹ 20,00,000/- as true undisclosed income out of the seized material. Ld. Assessing Officer has determined an income of ₹ 6,56,39,749/- which has been scaled down to ₹ 28,03,600/- by the higher appellate authority. A perusal of these details would indicate that allegation against the assessee for the purpose of visiting it with penalty would be, why assessee failed to compute true undisclosed income from the seized material. In the understanding of assessee the true undisclosed income out of the seized material comes to ₹ 20,00,000/-. The ld. Assessing Officer has not brought any material on the record indicating the deliberate flaw in the computation made by the assessee rather if we take the ultimate determination of income at ₹ 28,03,600/- vis-à-vis the undisclosed income determined by the Assessing Officer at ₹ 6,56,39,749/- then it would indicate that construction of seized material at the end of assessee is more closure to the true of computation of undisclosed income rather wild guess work made by Assessing Officer assessing the same at ₹ 6.56 crores. In this situation we are satisfied that assessee is able to demonstrate as to why he has computed his true undisclosed income at ₹ 20,00,000/-. Thus we delete the penalty of ₹ 4,82,160/- confirmed by ld. CIT(A). - Decided in favour of assessee.
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2016 (9) TMI 547
Eligible for deduction under section 80IA - Held that:- We uphold the finding of the learned CIT(A) that the assessee is eligible for deduction under section 80IA of the Act and also the directions of the learned CIT(A) to the AO to verify as to whether the losses have already been set off against the income of non-eligible unit in the earlier years and in case the losses were already set off then the same cannot be notionally carried forward for setting off against for computing the deduction under section 80IA of the Act. Addition u/s 14A - Held that:- The facts on record reveal that the interest expenditure of ₹ 39,20,797/- incurred towards term loans taken for purchase of Windmills by the assessee in the earlier years has no direct nexus with the earning of exempt income by the assessee and therefore is not to be considered while working out the disallowance under section 14A r.w. Rule 8D. In this view of the matter we delete the disallowance of ₹ 2,39,342/- made by the authorities below on this account.
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2016 (9) TMI 546
Penalties levied u/s 271D and 271E - violation of the provisions of sec. 269SS and 269T - Held that:- The various case laws have held that the loan/deposit received by way of cash to meet the urgent business requirements can be considered to be a reasonable cause and in that kind of situation the penalty u/s 271D cannot be levied. However, it is the responsibility of the assessee to prove that there was urgent business requirement on the day when the loan/deposit was received by way of cash. The assessee may prove the same on the basis of books of accounts and other documents. Accordingly, we are of the view that this issue relating to penalty levied u/s 271D of the Act may be set aside to the file of the Addl. CIT for fresh examination. In respect of the loan/deposit repaid in cash, the explanation with regard to urgent business requirements shall not apply. However, since the issue relating to penalty levied u/s 271D has been set aside to the file of Addl, CIT, we are of the view that, in the interest of natural justice, the assessee should be provided with one more opportunity to show the reasonable cause in making payment of loan/deposit by way of cash.In view of the foregoing discussions, we set aside both the orders passed by Ld CIT(A) and restore the issue to the file of the Addl CIT with the direction to examine the same afresh by duly considering the explanations and information that may be furnished by the assessee. - Decided in favour of assessee for statistical purposes.
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2016 (9) TMI 545
Disallowance made u/s 14A - Held that:- We notice that the Ld CIT(A) has restricted the disallowance to 5% of the dividend income. However he has committed an error in working out the disallowance of 5% of the dividend income. Accordingly we modify the order of passed by Ld CIT(A) on this issue and direct the AO to restrict the disallowance u/s 14A to 5% of the dividend income.- Decided in favour of assessee partly Disallowance made out of bad debts claim - Held that:- As the assessee has submitted that there was inadvertent error in mentioning the date of invoice. Further, the debt has actually been written off. In view of the Circular issued by CBDT, wherein the decision rendered by Hon’ble Supreme Court in the case of TRF Ltd (2010 (2) TMI 211 - SUPREME COURT ) has been followed, there is no justification in disallowing the sum of ₹ 55,000/- actually written off. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this disallowance.- Decided in favour of assessee Adhoc disallowance of manufacturing and other expenses - Held that:- there is merit in the submissions so made by the Ld A.R. In case of companies, which are having large volume of transactions, it would be practically difficult to bring all the evidences in one go. Hence the ledger account copies are furnished to the tax authorities and normally they are verified on a test check basis. In the instant case, the assessee has furnished copies of invoices and vouchers on a sample basis and it is stated that the assessing officer did not find any defects therein after carrying out examination. Also that the assessee has furnished the reasons for the fall in turnover and increase in manufacturing expenses. The sales relating to manufactured products have fallen from ₹ 233.74 crores to ₹ 210.65 crores, whereas the sales relating to traded goods have gone up from ₹ 14.15 crores to ₹ 35.51 crores. The assessee has stated that the change in the sales product mix coupled with the inflationary increase of prices and expenses have contributed to the increase in manufacturing expenses. When we look at this analysis furnished by the assessee, we do not find any infirmity in it. We notice that the AO has also not commented adversely on this analysis. Any deficiency noticed in the samples given would normally trigger further investigation. According to the assessee, the AO did not find any defect and further, did not ask for furnishing of further evidences. These discussions show that the assessee was willing to co-operate fully with the assessing officer and could not furnish all the volumes of invoices/vouchers due to practical difficulty only. Under these set of facts, in our view, there is no justification in finding fault with the assessee. There is no justification in making disallowance out of various expenses on ad-hoc basis, when the AO has not found fault or deficiency in any of the items of expenditure. Accordingly, we set aside the order passed by the Ld CIT(A) on this issue and direct the AO to delete the ad-hoc disallowance - Decided in favour of assessee
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2016 (9) TMI 544
Penalty u/s.271(1)(c) - disallowance of business expenses - Held that:- As per the nature of the assessee’s business, following principle of commercial expediency assessee has incurred expenditure of brokerage as well as professional fees. Assessee being in the business of real estate business, professional fees are required to be incurred. Merely disallowance of such expenses will not amount to concealment of particulars by the assessee. All particulars with respect to incurring of expenditure was on record, genuineness of expenses were also not doubted by the AO. No merit for the penalty so imposed with regard to disallowance of some of the expenditure incurred by the assessee. - Decided in favour of assessee
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2016 (9) TMI 543
Penalty u/s 271(1)(c) - claim of bad debts - whether the claim of the appellant was patently wrong under section 36(1)(vii) read with section 36(2) of the Act? - Held that:- As it is noted that in P&L account prepared for M/s Gopal Das Sonkia, assessee had claimed bad debts of ₹ 5,15,000/-. It consists of bad debt written off in books of accounts pertaining to amount advanced by way of loan to Shri Rajeev Khattar amounting to ₹ 5,00,000/- and interest thereon charged by assessee amounting to ₹ 15,000/-. In the balance sheet prepared for M/s Gopal Das Sonkia for immediately preceding financial year 2005-06 (AY 2006-07), an amount of ₹ 5,15,000 has been shown outstanding under the head “loans” totalling to ₹ 47,929,540. Similar is the position in the balance sheet prepared for the financial year 2004-05 (AY 2005- 06). The assessments have also been completed for both of these years u/s 143(3) where the above balance sheets were placed on record. The ld AR has further submitted a statement of account of Shri Rajeev Khattar right from year 2000 and onwards where the said amount of ₹ 515,000 has been shown as outstanding and in the year 2007, the same has been written off as bad debt and balance in the account has been reduced to Nil. The above facts shows clearly that the appellant had lent this money to Shri Rajeev Khattar and the same has been regularly been disclosed in the balance sheets right from the year the amount was lent to the year under consideration when the amount was finally written off. In light of this, it cannot be said that there is failure on the part of the appellant to disclose or conceal the true particulars of such transaction. It cannot be said that the claim of the appellant towards bad debt was patently wrong. Further, the Coordinate Bench while confirming the disallowance towards claim of bad debt has nowhere stated that the claim was patently wrong. Apparently, the Coordinate Bench was guided by the first limb of the two alternate conditions specified u/s 36(2)(i) of the Act whereas the appellant claim was largely under the second limb of 36(2)(i) of the Act. All it stated was that the appellant has failed to adduce appropriate evidence to show that such debt or part thereof has been taken into account in computing the income of the assessee of the previous year. During the course of subject proceedings, the appellant has ably demonstrated through appropriate documentation that he was engaged in the money lending business and has offered its interest income to tax. Accordingly, the claim of the appellant towards bad debts of loan transaction of ₹ 515000 cannot be held to be lacking in any bonafide. Its a different matter that in quantum proceedings, the appellant has failed to succeed however the same cannot be a basis for levy of penalty. - Decided in favour of assessee
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2016 (9) TMI 542
Addition as business receipts under section 28(1)(va) OR short term capital gain - Held that:- From the facts, of the case we find that the Commissioner of Income Tax (Appeals) has thoroughly examined the issue and made a clear cut finding that the assessee had paid ₹ 90,00,000/- for acquiring the business which he has subsequently sold during the succeeding assessment year for the same price. In such circumstances, obviously the short term capital gain will be Nil. Since the learned Commissioner of Income Tax (Appeals) has examined these facts and has given a clear finding, we do not find it necessary to interfere with his order. It is ordered accordingly.
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Customs
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2016 (9) TMI 570
Classification - Glyphosate Technical 95% - Paraquat dichloride 42% Technical - classifiable under Tariff Item 38089990 or under tariff item 38089390 - Fipronil 92% - Sources of imports - Insecticides Act, 1968 - Held that: - the DGFT both in the policy as well as the licences, issued to the appellant specifically mentioned the classification of the chemical ITC (HC) under tariff item 38089990. - the import policy as issued by the DGFT read with the licences given to the appellant are to be considered for assessment of clearance of the goods in so for they related to the classification of the goods. The appellant followed the provisions of DGFT import policy where the products are specifically mentioned by the name and also by the classification - no violation with reference to import - classification in order. The certificate of registration issued by the Ministry of Agriculture approved of import of these chemicals without any specification of source. Valuation - mis-decaration - Held that: - the quantum of import of each consignment will have the bearing of unit price and so also the time difference between the imports. There is nothing on record to indicate that the earlier import price has been vitiated by the extra consideration between the exporter and the India importer. The imports were under advance licence intended for re-export - re-determination not justified. Appeal allowed - decided in favor of appellant.
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2016 (9) TMI 569
Valuation - transaction value - Rule 3 (3) (a) of Customs Valuation (Determination of value of import goods) Rules, 2007 - related party - Rule 2 of Customs Valuation (Determination of value of import goods) Rules, 2007 - the case applicable involving the similar issue is Matushita Television & Audio Ltd. Vs. CC [2007 (4) TMI 5 - SUPREME COURT OF INDIA] - Held that: - letter submitted from the related supplier certifying the prices charged in the invoices for the supply of the goods at international prices which are computed on the basis of all costs and representative profit - transaction value acceptable. Assessable value - royalty - Rule 10 (1) (c)of Customs Valuation (Determination of value of import goods) Rules, 2007 - Rule 9 (1) (c)of Customs Valuation Rules, 1988 - Held that: - the royalty payment is includible in the assessable value of the goods. The value of imported goods is thus, included in the net sale price of appellant’s manufactured goods - appeal allowed - decided in favor of Revenue.
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2016 (9) TMI 568
Demand of SAD - Section 28(1) of the Customs Act, 1962 - demand of interest - Section 28AB of the Customs Act, 1962 - imposition of penalty - Section 112(a) of the Customs Act, 1962 - trading - imported Polyester Filament Yarn - imported Polyester Chips - exemption of SAD - Notification No. 22/99-Cus dated 28.02.99 - contravention of condition provided under Sr. 5 of the table annexed to the Notification No. 22/99-Cus. - whether the appellant is entitled for exemption under Notification No. 22/99-Cus dated 28.2.1999 from payment of Special Additional Duty in terms of Sr. No. 5 of the table annexed to the above referred Notification? - Held that: - similar issue has been decided in the case G.H. Shaikh v. CCE, Pune [2002 (9) TMI 702 - CEGAT, MUMBAI] where it was held that the proviso to Sl. No. 5 relates to a place from where sales takes place and not place to which sale is made. Exemptions have been given under the Sales tax Act in respect of certain transactions and such exemptions for specified cases would not make the place “an area where no duty is chargeable on sale and purchase of goods - Even though the sales tax was not charged from area from where the goods sold, such area shall not become non taxable territory to apply the proviso of Sr. 5 of the Notification No. 22/99-Cus - appellant entitled to claim exemption under notification no. 22/99-Cus - appeal allowed - decided in favor of appellant.
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2016 (9) TMI 567
Confiscation of consignment - under-invoicing of import of Diamonds - Bill of Entry not accompanied with packing list - option to pay redemption fine - section 125 of the Customs Act, 1962 - imposition of penalty - Section 112 (a) of the Customs Act, 1962 - Held that: - if serious mistake occurred the same should have been intimated by the appellant immediately whereas all the explanations brought before the department only when the excess quantity was detected. This shows that explanation and reason for excess shipped quantity given by the appellant appeared to be afterthought. Even if it is presumed that there is bonafide mistake in shipping excess quantity of diamonds, for the purpose of mis-declaration, mens rea is not required. Even though there is no mens-rea in the mis-declaration but if there is mis-declaration intentional or un-intentional, the goods are liable for confiscation. The element of mens-rea is only parameter to decide the quantum of fine and penalty - confiscation justified - quantum of fine and penalty reduced. Re-export of excess found goods - Held that: - allowed to be re-exported. Decided partly in favor of appellant.
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2016 (9) TMI 566
Served From India Scheme Scrip (SFIS) - wrong availing of benefit of exemption Notification No. 91/09-Cus dated 11.09.2009 - assorted wines, liquors, beers etc - assessment of bills of entry - Held that: - the goods imported by the licence holder and in the circumstance, on merit the appellant has not contravened the provisions of Notification No.91/09-Cus dated 11.09.2009 as the goods were not be transferred or sold. Also, the bills of entry has been assessed and there is no allegation against the appellant of mis-declaration or mis-classification or suppression of facts, therefore without challenging the bills of entry, the proceedings are not sustainable. The assessment of bill of entry has not been challenged by the Revenue, therefore, the said assessment of bills of entry are final. Therefore, without challenging the same, the show cause notice issued to the appellant is not sustainable. Decision as given in the case Karan Associates vs. CC, Mumbai [2009 (2) TMI 20 - BOMBAY HIGH COURT] has been followed. Invocation of extended period of limitation - malafide intention to evade payment of duty - Held that: - malafide intention of the assessee has not been established. In the show cause notice it was merely alleged that the appellant has taken the benefit of Notification No.91/09-Cus dated 11.09.2009 wrongly - extended period of limitation is not invokable. Appeal allowed - decided in favor of appellant.
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2016 (9) TMI 565
Foreign Going Vessel - Conversion of vessel to coastal run – ship stores inventorised at the time of conversion – consumption of provisions during coastal voyage – inclusion of local purchase of the quantity of 193.03 MT of fuel in the opening inventory of 678.22 MT of fuel oil – ascertainment of the total quantity of fuel oil consumed during the coastal run – Held that: - local purchase of the quantity of 193.03 MT of fuel oil is to be included in the opening inventory of 678.22 MT of fuel oil - resultant duty liability on the net quantity of fuel oil Viz., 379.22 MT could be fastened on the appellants - demand of duty justified. Valuation – Held that: - the Commissioner has adopted a very just and fair reasoning with regard to ascertaining the assessable value of imported fuel oil lying in the foreign bunkers for finalisation of the provisional assessment. The adjudicating authority had taken contemporaneous price of identical goods of which the bunkers were supplied to the same class of buyers during material period. This is the correct and proper manner for finalization of the assessment. Appeal dismissed – decided against appellant revenue.
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Service Tax
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2016 (9) TMI 588
Demand - Business Auxiliary Service during the period 01-04-2005 to 31-03-2010 - appellant is running SUWIDHA (Single User-friendly Window Disposal and Help-line for Applicants) Centers at various towns of the district - providing various Government services under one roof - Held that:- the commissioner in the impugned order has taken the view that ‘provision of service on behalf of the client’ appearing in the definition of Business auxiliary Service, would mean that any service on behalf of any client, would be covered under it. We are of the view that such an interpretation is totally mis-placed. The business auxiliary service is rendered in relation to the business of the recipient. In the present case, the service of facilitization has been rendered to the Govt departments, which are engaged not in business but in rendering public services. Hence we find that the present case fails the basic test prescribed by CBEC in the circular dated 23.08.2007 that for charging service tax, the service should not be in the nature of statutory duties of the government. Therefore, the impugned order is set aside. - Decided in favour of appellant
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2016 (9) TMI 587
Refund claim - Cenvat Credit of tax paid on various input services in terms of Rule 5 of the Cenvat Credit Rules 2004 read with notification no. 5/2006-CE(NT) dated 14.03.2006 - services rendered by assessee amounts to export of services or not - Held that:- the Appellate Authority is not disputing the fact that the Tribunal's decision in the same assessee’s case has held that the services rendered by them are required to be held as export of services, in which case the refund would be admissible to them. However, the Commissioner (A) has not followed the said decision of the Tribunal on the sole ground that the same has not been accepted by the Revenue and appeal there against stanad admitted by the Hon'ble Supreme Court. It is also a fact that there is no stay of operation of Tribunal's decision by the Hon'ble Supreme Court and mere admission of the appeal filed by the Revenue cannot be adopted as a ground for non following of the Tribunal's decision. In as much as the Tribunal has already decided the issue in favour of the assessee, I find no reason to take a view different than the one taken by the Tribunal. - Decided in favour of appellant
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2016 (9) TMI 586
Demand - Commercial or Industrial Construction Service - appellant is engaged in the activity of construction of office/branches on behalf of ICICI Bank in the state of Punjab under composite contract - appellant contended that the activities undertaken by them falls under the category of ‘work contract service’ w.e.f. 01-06-2007 - Held that:- it is evident from the show cause notice as well as from the adjudication order that the contract entered by the appellant with the recipient of the services cannot be vivisected. Therefore, the decision of Hon’ble Apex Court in the Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT] is squarely applicable to the facts of this case. Therefore, the activities of the appellant fall under the category of ‘work contract service’, which was made chargeable to service tax w.e.f. 01-06-2007. The period prior to 01-06-2007, the activity undertaken by the appellant was not chargeable to service tax. - Decided in favour of appellant with consequential relief
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2016 (9) TMI 585
Invokation of extended period of limitation - Demand - Evasion/short-payment of service tax - Business Auxiliary Service viz., airline incentives income - Held that:- the appellant is rendering services related to booking, preparation of bill, collection of realization by the appellant on behalf of the airlines which, in our view, would fall under the category of promotion and marketing of airline services. Inasmuch as the appellant is encouraging the various clients for booking the space in a specific airline, we do not find any merits in the submission made by the Learned Counsel on this point and we hold on merits against the appellant on this issue. As regards the question on limitation, on this point we find that they have very strong case on limitation as there was a confusion which may arose on this point as it is a question of interpretation. It was also brought to our notice that earlier show cause notice was issued on this issue and they were not adjudicated by the lower authorities. If that be so, the demand which is beyond the period of limitation from the date of issuance of the show cause notice in this appeal is hit by limitation while the demand within the limitation period in this appeal is liable to be upheld and confirmed. Invokation of extended period of limitation - Demand - Evasion/short-payment of service tax - Business Auxiliary Service viz., net income earned as a freight forwarder - appellant earned additional amount from their clients on the space which has been booked by the appellant with particular shipping lines - Held that:- the appellant books the space and make payment to the shipping line in advance and/or, as and when the bills is raised, and sells the same to their customers at a profit. The appellant is not rendering any service either to the shipping line or to its customers, more so, under business auxiliary service. This view of ours is fortified by the decision of this very same bench in the case of Greenwich Meridian Logistics (India) Pvt. Ltd. [2016 (4) TMI 547 - CESTAT MUMBAI] and by a coordinate bench of this Tribunal in the case of DHL Lemuir Logistics Pvt. Ltd. Since the issue involved in this case is already decided against the Revenue, respectfully following the same we set aside the impugned orders in both the appeals as regards the demand raised and confirmed under this issue Invokation of extended period of limitation - Demand - Evasion/short-payment of service tax - Business Auxiliary Service viz., income earned as charge collection fees - income earned by the appellant for the charges incurred by them in respect of freight charged to their customers on a specific query from the bench - Held that:- was unable to justify that these were really reimbursements of the expenses/freight incurred by them. The adjudicating authority on this issue has categorically recorded that the appellant has recovered charge collection fees to cover the cost of financial and banking cost associated with the freight liability paid by them. In any case, we do find that the appellant is not seriously contesting the tax liability under this head. In appeal ST/217/2012 the demand under this head which is beyond the period of limitation is set aside and demands within the limitation period are upheld. Imposition of penalties - Held that:- the issue involved in this case is question of interpretation and the interpretation could have been due to the confusion arising whether the amounts are chargeable to tax under specific heading under business auxiliary service or otherwise. Since the issue involved is of interpretation, we hold that penalties imposed by the lower authorities are unwarranted. Accordingly, the penalties are set aside. - Appeals disposed of
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2016 (9) TMI 584
Refund claim - credit was wrongly availed on the invoices issued to the Hyderabad office of the assessee - Hyderabad office does not find place in registration certificate - Held that:- considering that there is no dispute about the receipt of services by the respondent and the utilisation thereof being permissible even without registration under Finance Act, 1994, the rejection of invoices raised on an address that is not included in the registration certificate would not sustain. The respondent, as an exporter of goods, is privileged to exclude the tax/duty element from the export price. In these circumstances, the settled law of lack of registration not being an impediment for utilisation of CENVAT credit finds equal acceptance in allowing the refund of CENVAT credit relating to the tax paid on inputs/input services. Period of limitation - computation of one year from the date of FIRCs would render it beyond the period of one year specified in section 11B of Central Excise Act, 1944 - relevant date is the last day of the relevant quarter of receipt of FIRCs instead of the dates on which the FIRCs had been issued is not in accordance with the notification 27/2012-CE(NT) dated 18th June 2012 - Held that:- the settled law relating to the date of issue of FIRCs being acceptable for compliance to the procedure laid down in notification no. 27/2012-CE(NT). The restrictions imposed on filing of refund claim cannot be further restricted by computing the deadline from the date of issue of FIRCs. Accordingly, there is no flaw in the findings of the first appellate authority that last date of quarter in which the FIRCs were issued should be the relevant date for computing the period within which the refund should be sought. - Decided against the Revenue
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2016 (9) TMI 583
Restoration of appeal - ex-patre oder passed for non appearance of appellant - applicant contended that it have not received the notice for hearing - Held that:- it is found that the notice for hearing states that the matter was listed on 06.10.2015 and the same has been adjourned to 15.12.2015 before Chandigarh bench. The said notice was issued to the applicant on 16.11.2015. As the merits of the case has not been considered by this Tribunal, therefore, in the interest of justice, We recall our order dated 06.10.2015 and 15.12.2015 and direct the registry to restore the appeal by allowing the application for ROA and to list the stay application on 01.08.2016. - Decided in favur of applicant
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2016 (9) TMI 582
Period of limitation - Refund claim - Notification No. 41/2007-ST dated 06.10.2007 - refund claim for the quarter ending for March 2008 was filed on 27.08.2008 whereas as per the period prescribed in the notification the same was required to be filed within a period of 60 days from the end of relevant quarter during which the said goods have been exported - Held that:- the Tribunal being the creature of Act cannot go beyond the provisions of the Act and has to interpret the law accordingly. The said legal issue stands set at rest by many decisions of the higher courts. Some such reference can be made to the Hon’ble Supreme Court’s decision in the case of Miles India Ltd. Vs. Assistant Collector [1984 (4) TMI 63 - SUPREME COURT OF INDIA] as also in the case of CCE Vs. Doaba Co-operative Sugar Mills [1988 (8) TMI 103 - SUPREME COURT OF INDIA]. Therefore, as such the refund admittedly being beyond the period of 60 days, we find no justifiable reasons to interfere in the impugned orders of the authorities below. - Decided against the appellant
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Central Excise
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2016 (9) TMI 581
Refund claim - service tax paid on input services for the period of 01.04.2005 to 30.09.2006, which were used for manufacture and export of final products viz., Soyabean De-oiled cakes and Soya Floor - appellant had not exported the goods under LUT or bond - final product being exempted from payment of Central Excise duty - Held that:- the issue involved in this case is squarely covered by the judgment of Hon'ble Himachal Pradesh High Court in the case of CCE Vs. Drish Shoes Ltd. [2010 (5) TMI 334 - HIMACHAL PRADESH HIGH COURT]. With regard to execution of Bond/LUT under the Central Excise Rules, 2002, it is found that the Tribunal in the case of Jolly Board Ltd. Vs. CCE, Aurangabad [2014 (3) TMI 124 - CESTAT MUMBAI] has held that such non-execution is only a procedural lapse, for which refund benefit cannot be denied. It has further been held that if the goods are exempted, there is no requirement of execution of Bond/LUT. Therefore, in view of the same, the impugned order is set aside. - Decided in favour of appellant
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2016 (9) TMI 580
Excisability and chargeability - manufacture and clearance of Gas Conversion Kits without payment of duty and without following Central Excise procedures - Held that:- the respondent has developed the design, manufacturing and selling of Gas Conversion Kits based on the imported Gas Conversion Kits. The adjudicating authority held that what was cleared are individual parts but it is found that the Gas Conversion Kits were cleared with brand name of Lovoto. Whereas the adjudicating authority held that the Gas Conversion Kit consists of one number each of vaporizer, Gas solenoid, petrol solenoid and tail assembly and the items do not lose their identity and there is no manufacturing activity involved. The goods are identified in the market as Gas Conversion Kits and consideration also received on not sale of parts but for the entire Gas Conversion Kits. Therefore, the Gas Conversion Kits cleared by the respondent amounts to manufacture and squarely covered under the definition of Section 2 (f) of the Central Excise Act. - Decided in favour of Revenue
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2016 (9) TMI 578
Recovery of interest and imposition of penalty - Rule 15 CCR r/w 11AC of the Central Excise, Act, 1944 - irregular avilment of Cenvat credit - availment of 100% credit on capital goods in the first year - Held that:- it is correct that there is no determination of duty in the order passed by the adjudicating authority. This is because, though the appellants had wrongly availed 100% credit on capital goods in the same financial year, which is contrary to the provision of Cenvat Credit Rule, 2004, they would have been eligible for credit in the subsequent year. Thus, the demand raised in show cause notice is only for interest which is already paid by the appellant. When the show cause notice itself is for demand of interest only and no determination of duty, the adjudicating authority has confirmed the proposed penalty of equal amount. When there is no evidence to establish that wrong availment of credit was intentional and a determination of duty for the said act of commission or ommission on the part of appellant, the penalty imposed is not sustainable. In this case, there was no demand of duty as the appellant was eligible for 50% credit in the subsequent year. There is no fraud or suppression of facts brought out with intent to evade payment of duty. Therefore, in the absence of determination of duty, the question of penalty under section 11AC does not arise at all. - Decided partly in favour of appellant
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2016 (9) TMI 577
Valuation - amortization of the coast of dies/moulds on the value of the goods manufactured - dies/moulds cleared on payment of duty to various parties - adoption of Rule 6 - Held that:- it is found that in the name of amortization what has been done, is simply to take the value of Dies/Moulds and charge excise duty on such value. No effort has been made by the Revenue to arrive at the amortization cost of Dies/Moulds on scientific basis. We find it difficult to approve such amortization on a summary basis simply by referring Rule 6. It is found that the Dies/Moulds through cleared on payment of duty to their customers were received in their factory under invoices. It is also on record that the appellant has availed the Cenvat Credit of the duty paid on such Dies/Moulds upon their return to appellant’s factory for use in the manufacture of goods for the customers. It is not clear whether through such invoices only the Cenvat duty paid on the Dies/Moulds have been returned or whether the cost of such Dies/Moulds also stands returned. In the latter case, the dies/Moulds would effectively become free supply in the hands of the appellant. The value of the goods manufactured by the appellant should include the appropriate fraction of the cost of Dies/Moulds as it have been given in the explanation of Rule 6, but, we are not convinced that the amortization has been properly done on a scientific basis. Therefore, the matter needs to be remanded to the Original Adjudicating Authority for re-examination of the matter. - Appeal allowed by way of remand
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2016 (9) TMI 576
Cenvat credit - insurance service, gardening service, network detective service, manpower service, export service, repair & maintenance service and software service prior to 01.04.2011 - Held that:- as the assessee has availed all these services in the course of their business of manufacturing of excisable goods, it is entitled to avail cenvat credit all these services for the period prior to 01.04.2011 in the light of the decision of Hon’ble High Court of Bombay in the case of Ultratech Cement Pvt. Ltd. [2010 (10) TMI 13 - BOMBAY HIGH COURT]. Cenvat credit - services namely insurance service, gardening service and network detective service after 01.04.2011 - Held that:- it is found that insurance service has been availed by the assessee of medical insurance of their employees which they are statutory required to availed in the light of employee State Insurance Act which provides that the assessee is compulsory required to take insurance of the employee, therefore, I hold that the said service is integrally part of the manufacturing activity and they are entitled to avail the cenvat credit on the said services in the light of the decision of this Tribunal in the case of Hindustan Coca cola Beverages Pvt. Ltd. [2015 (10) TMI 2463 (CESTAT- New Delhi)]. With regard to public liability insurance, it is found that without taking the said insurance the assessee cannot run their factory. In fact the said insurance is for public to provide cover from any environment harms and without the same, the assessee can’t run factory. In these circumstances, I hold that the assessee is entitled to avail cenvat credit. Further, it is found that the insurance service has been availed by the asseessee for the transportation of goods beyond their factory. It is the contention of the appellant that although they have taken cenvat credit on these services but they have paid service tax on insurance charges and recovered from their dealer on which they are entitled to take cenvat credit as per rule 2(I) of the Cenvat Credit Rules, 2004. I do agree with that and allow the cenvat credit. With regard to gardening maintenance service, assessee is entitled to avail such service in the light of the decision of Tribunal in the case of Lifelong Meditech Ltd. [2016 (7) TMI 468 - CESTAT CHANDIGARH]. With regard to network detective service, it is found that the said service has been availed by the assessee for verification of credentials of their employees before employing them to work which is essential to run the factory, therefore, I hold that the assessee is entitled to take cenvat credit on these services. - Decided against the Revenue
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2016 (9) TMI 575
Cenvat credit - appellant has not received the goods in truck - vehicle number in question is not capable to carry such the goods - revenue has sought verification report, with regard to the vehicles number from the DTO office but the same have not been placed on record - Held that:- the appellant has produced all the documents pertain into transportation of said goods from M/s SAIL to their factory and same has not been controverted by the Revenue with positive evidence. In these circumstances, the evidence produced by the appellant are having evidential value, therefore, I hold that the allegation made by the Revenue against the appellant are merely on assumption and presumption without producing any evidence or record. - Decided in favour of appellant
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2016 (9) TMI 574
Whether the appellant being job worker i.e. manufacturer of body building is required pay automobile cess or not as per Automobile Cess Rules, 1984 read with industries (Development and Regulation) Act, 1951 or not - Held that:- on introducing the Circular No. 41/88 dated 31st August, 1988 by CBEC, the matter of levy of automobile cess was referred to Administrative Ministry i.e. Ministry of Industries and as intimated the intention behind the notification levying the cess is to realize from the vehicle manufacturers and not from the body builders. Further, as per IDR Act, 1951, the notification for levying of cess has been issued, which provides that the rate of cess shall not, in any cess, exceeds to two percent of the value of the goods i.e. 1/8th per cent of the value of vehicle. It was also clarified that the cess may continue to be levied and collected in the condition they are cleared from the premises' of the manufacturers and no cess should be levied again in case the body on the chassis is built by an independent body builder on the cess paid chassis. Therefore, there was no intention of the Administrative Ministry to levy cess on the activity of the body building. In that case, although the appellant may be the manufacturer in the light of the Chapter Note 5 of the Chapter 87 of the Central Excise Act, 1985, the automobile cess cannot be levied or collected from the appellant. Therefore, the arguments advanced by the Revenue are not acceptable as the said clarification issued by the Ministry of Industries has not been withdrawn till date. In that situation, the decision of the Tribunal in the case of Tata Motors Ltd. vs. CCE, Pune-III [2015 (1) TMI 1082 - CESTAT MUMBAI] is squarely applicable to the facts of this case. - Decided in favour of appellant
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2016 (9) TMI 573
Duty liability - marketing of Hydrogen gas cylinder - filling process - appellant received Hydrogen gas through pipeline and filed the same in returnable gas cylinders with identification mark of itself and sold to various consumers - filling process is done by the appellant with the aid of filter, dehydration and compressor - Held that:- the issue is no more res-integra as is decided by the Tribunal for the earlier period in the appellant's own case on the identical issue reported in [2016 (1) TMI 1055 - CESTAT NEW DELHI] that the activity undertaken by the appellant does not amount to manufacture. Therefore, in view of the same we hold that the activity undertaken by the appellant does not amount manufacture and the appellant is not liable to pay duty. - Decided in favour of appellant with consequential relief
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2016 (9) TMI 572
Classification - whether the various types of welded Wire Mesh, which has been supplied to poultry farms and is being used as poultry farm accessories to cover the poultry cage is to be classified under the heading 7314 by treating the same as articles of Iron & Steel or to be classified under heading 8436 as goods for poultry keeping machinery chargeable to nil rate of duty - Held that: the goods manufactured by the appellant are in the form of Welded Wire Mesh and are supplied to poultry farms and claimed to be specifically designed parts of poultry keeping machinery. If the goods are considered as simple products of Iron & Steel, the classification indicated is Heading 7314. Further, it is found that in the case of C.C.E. Hyderabad vs. Weld Fuse Pvt Ltd [2006 (10) TMI 307 - CESTAT, BANGALORE] , where the classification of similar goods have been examined, it has been decided that the goods in question are more appropriately classifiable as parts of poultry machinery falling within the scope of tariff Entry no. 84369100. Therefore, the issue of classification of welded wire mesh made specifically for poultry keeping is no longer res-intgra and the classification is ordered under 84369100. - Decided in favour of appellant
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2016 (9) TMI 571
Extended period of limitation - Valuation - amount of sales tax concession retained by the assessee - assessable value - Held that: - during the relevant period there was CBEC Circular dated 30.06.2000 which provides that any amount of concession on sales tax retained by the respondent is not required to be added in the assessable value and there are certain judicial pronouncements of this Tribunal holding the same view in the case of Life Long India Pvt. Ltd. vs. CCE [2012 (3) TMI 349 - CESTAT NEW DELHI]. views as taken by the circular and Tribunal has been negated by the Apex Court - extended period of limitation not invokable - demand of duty and penalty set aside. Appeal dismissed - decided in favor of assessee.
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CST, VAT & Sales Tax
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2016 (9) TMI 564
Rejection of input tax credit claim - imposition of penalty - section 27(4)(ii) of the Act - dealer in general goods - opportunity of being heard - Held that: - so long as the vendor was not found to be a registered dealer on the files of the Department, the claim of the dealer for refund could not be rejected not delayed. The issue decided in the case ALTHAF SHOES (P) LTD., v. ASSISTANT COMMISSIONER (CT), VALLUVARKOTTAM ASSESSMENT CIRCLE, CHENNAI-6 [2011 (10) TMI 567 - Madras High Court]. It is admitted that the petitioner's vendors were all registered dealers on the files of the Department and that petitioner had also given the TIN number of these vendors. When such particulars were available, it was for the Department to take necessary action against the vendors, who had not remitted tax collected by them to the State. Without taking recourse to that, the Department could not deny the claim of the petitioner - matter remanded for fresh consideration - petition disposed off - decided in favor of petitioner.
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2016 (9) TMI 563
Stay of assessment proceedings - dealer - KVAT, 2003 - the issue similar to the case State of Punjab and others v. Shreyans Indus Ltd etc [2016 (3) TMI 331 - SUPREME COURT] - Held that: - It shall be open for the assessment authority to complete the procedure in terms of Exts.P4 and P5 notices after giving an opportunity to the petitioner for hearing. All questions raised by the petitioner shall be considered in the properly constituted appeal/proceedings - the right of petitioner to prefer appeal reserved - petition disposed off - decided against petitioner.
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2016 (9) TMI 562
Classification - Split Air Conditioner - taxable at 4% or 20%? - works contract - eligibility for composition scheme - Reduction of penalty - Held that: - the revision petitioner is entitled to invoke Section 7-C of the Act, which starts with a notwithstanding clause and gives option to the assessee that instead of paying tax, in accordance with Section 3-B, he may pay, either on the total value of each works contract or on the total value of all works contract, executed by him, in a year, tax calculated at the rates specified. Payment of 4% tax on the turnover of composite works contract, under Section 7C of the Tamil Nadu General Sales Tax Act, has been admitted - Levy of penalty would not be justifiable, if at the time of assessment, turnover has been recorded as per the books of accounts, verified by the department and in such circumstances, suppression cannot be attributed. Transaction giving rise to taxable turnover, has been categorically declared by the assessee as composite works contract and at the concessional rate of 4%, tax has been paid. In such circumstances, it cannot be contended that it is a deliberate and wilful non-disclosure of turnover, in the return and thus, rightly proceeded, under Section 12(3)(b) f the Act, which deals with Submission of incorrect or incomplete return - penalty not imposed - appeal allowed - decided in favor of appellant.
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2016 (9) TMI 561
Sales Tax Waiver Scheme - amendment in eligibility certificate - is petitioner entitled to benefit of waiver scheme even after amendment in eligibility certificate - TNGST - Held that: - the petitioner's Eligibility Certificate has been amended and the Eligibility Certificate has not been cancelled or declared as null and void by the respondents, who are Sales Tax Authorities. As long as the petitioner's Amended Eligibility Certificate, dated 28.08.2002, is valid and not been cancelled by the competent authority, the petitioner is entitled to the benefit of waiver scheme. Respondents have no jurisdiction to cancel such eligibility certificate - petitioner not liable to tax - petition allowed - decided in favor of petitioner.
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2016 (8) TMI 1124
Demand of interest - Classification - Skimmed Milk Powder - rate of tax 10% - milk food - rate of tax 4% - interim injunction for limited period - restrain from collecting of tax more than 4% on the skimmed milk - remittance of differential 6% of tax on withdrawal of interim injunction - section 24(3) of the Act states that on any amount remaining unpaid after the date specified for its payment as referred to in sub section (1) of Section 24 or in the order permitting payment in installments, the dealer or person shall pay, in addition to the amount due, interest @ 1½ % of such amount for the first three months of default and 2% for the subsequent period - Section 13 of the Act deals with advance payment of tax and for the remaining tax, there should be a provisional assessment and on such determination and intimation to the dealer, he shall pay the tax - whether belated remittance of differential tax would attract interest under section 24(3) of the Act? Held that: - there is no provision under the TNGST Act, which permits charging of interest unless and until there has been provisional assessment and notice of demand prescribing the period within which tax was to be paid. There is no record to show that provisional assessment was made and the notice calling upon the petitioner to pay the differential rate of tax was only on the ground that the petitioner did not remit 10% tax but remitted only 4% tax. The petitioner did not admit his return and assessment was completed and he was assessed to tax @ 10% only on 27.10.1997 i.e. after about seven years after the relevant period viz., August and September 1991. After the Assessing authority held that tax is liable to be paid @ 10%, the petitioner paid the differential tax of 6% immediately after the order was passed in 1997. In such circumstances, the provisions of Section 13 would not be attracted to the facts of the present case. Demand of interest not justified - petition allowed - decided in favor of petitioner.
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Indian Laws
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2016 (9) TMI 560
Demand of unearned incremental charges - whether payment of unearned incremental charges demanded by the Collector of Mumbai is the responsibility of the Appropriate Authority as the assignor of the leasehold interest or of the Petitioners as the auction purchaser? - Held that:- The relevant clause of the lease deed gave an option to the Collector to require payment of half unearned incremental charges in the event of any assignment or transfer. The Collector chose to raise such demand after the auction purchase was effected. These charges were not known to the Department at the time the auction sale was effected. Such demand would obviously be covered, as we have noted above, in the conditions of sale quoted above. In the premises, there is no merit in the challenge to the demand of the unearned incremental charges from the Petitioners. The Petitioners' contention that the demand must be honoured by the Appropriate Authority, is without any substance.
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