Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 18, 2018
Case Laws in this Newsletter:
GST
Income Tax
Customs
Corporate Laws
Insolvency & Bankruptcy
FEMA
PMLA
Service Tax
Central Excise
CST, VAT & Sales Tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
GST
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Guidelines for Deductions and Deposits of TDS by the DDO under GST
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Classification of product - rate of tax - Energy-G premium oil - Correct HSN Code of "Energy-G premium Oil" is HSN 1518
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Rate of GST - ITC - The rate of tax to be levied is 12% (8% GST after deducting value of land) in case of Affordable Housing Project. If the project qualifies as an Affordable Housing Project, then registration under Pradhan Mantri Awas Yojana is not required to avail this benefit - The applicant will be eligible for ITC subject to fulfilment of conditions as prescribed under the GST Act.
Income Tax
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Additions on account of professional fees paid to a member of the assessee Association of Person [AOP] - the impugned payment were mere appropriation of profits and could not be allowed as a deductible expenditure. The share of the contract receipts was predetermined and the same was nothing but the profit sharing ratio only.
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Deduction u/s 80-IA(4)(iii) - Notification to be issued by CBDT is only a formality once the approval is granted by the Ministry of Commerce & Industry, Govt. of India, and, therefore, hold that once the CBDT Notification is issued, the assessee is entitled to the benefits u/s 80 IA (4)(iii) from the date of approval by Ministry of Commerce and Industry, Govt. of India, subject to the compliance of the terms and conditions specified therein.
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Addition u/s. 68 - three ingredients of section 68, i.e., identity of the creditors, creditworthiness thereof and genuineness of the transactions - Simply because the assessee received the amounts through cheques would not prove the transaction as genuine.
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Addition u/s. 68 - unexplained cash credit - investment out of his undisclosed source - employer used/mis-used the account of the assessee with his knowledge and signature - Additions deleted being not real beneficiary - commission of 0.1% needs to be computed as the income of the assessee.
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Penalty u/s 271(1)(c) - expenditure of webhosting and misc. expenditure for website development - when the assessee has come up with bonafide claim, even if it is not accepted, it would not per se tantamount to furnishing inaccurate particulars so as to attract the penalty proceedings u/s 271(1)(c)
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Disallowance of foreign education and training expenses of partner as being not related to the business of the firm - this Court is fully satisfied that this is not a case where there is a misuse of the provision of Section 37 of the Act to foist a personal expenditure as a business expenditure. - Expense allowed.
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Reopening of assessment - non-reporting of the receipt of income on account of royalty is a valid ground for the Ld. AO to propose the reopening of the assessment, and it cannot be said that there was no escapement of income merely because tax was deducted at source on such income.
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Setoff of busniss loss - whether loss sustained in business can be set off against betting and gambling income; and only the net income is to be taxed under Section 115-BB? - Held No - total winnings from betting of the assessee should be brought to tax at the rate of 40% as contemplated under Section 115BB of the Act.
Customs
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Import of Shea Butter ultra refined - since the notification does not have any condition of end use, therefore even if the consignment is being used in the cosmetic industry which is of refined edible grade, the benefit of notification giving concessional rate of Customs duty cannot be denied to the appellant.
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Import of restricted goods - Scrap/ second hand goods - imposing an exemplary redemption fine and penalty without considering the margin of profit - the redemption fine and penalty imposed in the present case is highly exorbitant and is liable to be reduced.
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Incremental Exports Incentivization Scheme - Limit brought in monetary limits vide Notification dated 23.09.2014, with retrospective effect - the action is without jurisdiction, arbitrary, illegal and capricious and contrary to the provisions of the Policy and the Handbook of Procedures
Indian Laws
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Cheque dishonoured - Mere denial of liability or passing of consideration will not be sufficient to rebut the presumption under section 139 of the N.I. Act. Such a rebuttal should be backed by some material evidence which could probabilise the facts content in it.
Service Tax
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Classification of Services - appellant own two Aircrafts/Helicopters, which are being provided by them on chartered hire basis - the services will be rightly classifiable under the category of “Supply to Tangible Goods Service” - the classification of the service under the category of STGS upheld.
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Levy of penalty- service tax collected but not paid within prescribed dates - reasons of bad financial health can be considered as the reasonable cause for their failure to discharge the tax liability in time - Penalties u/s 76 and 77 set aside by invoking section 80.
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Since the activity itself of construction of the houses for personal use is beyond the taxable category even if this activity is undertaken by any sub-contractor the category for the levy of service tax will not change and the sub-contractor will also be entitled for exemption.
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Refund of accumulated Cenvat credit - failure to submit documentary evidence for export of services - The fact of export of such software and the receipt of the foreign exchange therefore is sufficiently evidenced from the invoices, the FIRCs and the Chartered Accountant’s certificate certifying the total turnover.
Central Excise
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Classification of goods - coated fusible interlining fabrics of cotton - When Chapter Note 2 (c) itself is no longer in existence, and the impugned goods otherwise did not satisfy the requirements laid down in Chapter Note 2(a) read with CBEC circulars (supra), impugned goods will not get classified under CETH 59.03.
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CENVAT Credit - Common inputs/input services used in manufacture of taxable goods as well as in trading activity - the works contract remains works contract and cannot be vivisected for taxing various activities under different services. - merely because the amounts billed by the appellant separately in a commercial invoice of these items can’t be treated as a trading activity.
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CENVAT credit - duty paying invoices issued by the Coal Companies - supplementary invoices - the issue of wrong availment on part of M/s SECL is still a debatable issue - the ascertainment on part of the appellant as is required under Rule 9 (1) (b) of Cenvat Credit Rules cannot be held to have been an act of suppression.
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Refund claim - destruction of rejected inputs and expired manufactured goods - rejection of refund on the ground that destruction was not carried out in the presence of Central Excise officer - as such, the benefit, cannot be denied on a mere procedural lapse.
Case Laws:
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GST
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2018 (9) TMI 975
Maintainability of Advance Ruling Application - proceedings are already initiated against them before the filing of their present application - Section 98 of the CGST Act - Levy of GST - excess length of Optic Fibre (OF) - independent customers - distinct persons in terms of Schedule I provisions - CENVAT credit. Held that:- It is very clear that proceedings under the relevant provisions of this Act are initiated in respect of the application prior to their filing of this application for Advance Ruling - the application filed by the applicant is not maintainable as per the provisions of Section 98 of the CGST Act, as proceedings are already initiated against them before the filing of their present application. The applicant's application is liable for rejection as per proviso to section 98 (2) of the CGST Act and therefore cannot be entertained by this authority and is accordingly rejected being non-maintainable.
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2018 (9) TMI 974
Rate of Tax - sale of Flats/ Units to the prospective buyers - Pradhan Mantri Awas Yojana - Composite works contract service - inward supply. What is the rate of tax to be levied on the sale of Flats/Units to the prospective buyers? And whether registration of project under Pradhan Mantri Awas Yojana is required? - Held that:- The applicant's case is covered under the tax rate of 12%, under Heading 9954 (Construction Services), (v) (da) of above mentioned Notification No. 11/2017, as amended since the project undertaken by them falls under the definition of “Affordable Housing” as stated by them in the application (Whether the housing project qualifies as affordable housing project or not, shall be determined by the applicant as per the definition of affordable housing given in the above mentioned notification.) The benefit of reduced rate would be available to them only in the cases of supply effected after 25.012018 i.e. the date on which Notification 1/2018-Central Tax (Rate) was issued. What is the rate of tax to be levied by. the supplier (who is registered under GST) from whom we intend to receive composite works contract service (Inward Supply of Composite works contract)? Will it be 12% or 18%? - Held that:- At the time of hearing it was communicated to them that this question can only be raised by the supplier and not by them and they agreed to the same and the question is therefore not answered in this case. Input Tax Credit - Whether full ITC is allowable or it will be restricted to output GST liability? - Held that:- The builder or developer will not be required to pay GST on the construction service of flats etc. in cash but would have enough ITC (input tax credits) in his books to pay the output GST, in which case, he should not recover any GST payable on the flats from the buyers. He can recover GST from the buyers of flats only if he recalibrates the cost of the flat after factoring in the full ITC available in the GST regime and reduces the ex-GST price of flats - The applicant will be eligible for ITC subject to fulfilment of conditions as prescribed under the GST Act. Ruling:- The rate of tax to be levied is 12% (8% GST after deducting value of land) in case of Affordable Housing Project. If the project qualifies as an Affordable Housing Project, then registration under Pradhan Mantri Awas Yojana is not required to avail this benefit - The applicant will be eligible for ITC subject to fulfilment of conditions as prescribed under the GST Act.
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2018 (9) TMI 973
Classification of product - rate of tax - Energy-G premium oil - clarification sought for Correct HSN Code of the product - Held that:- The product under question is manufactured out of Vegetable fats/ oils and not from animal fats/ oils. That being so the classification of product is HSN 1518 and shall be subject to 5% CST as per Schedule I of Notification No. 1/2017-C.T. (Rate), dated 28-6-2017 and corresponding SGST Notification. Ruling:- Correct HSN Code of "Energy-G premium Oil" is HSN 1518 vide S. No. 90 of, Schedule I of Notification No. 1/2017-C.T. (Rate), dated 28-6-2017 and hence the rate of tax attracts 5%.
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2018 (9) TMI 972
Payment of Contract Value with respect to Works Contract - transitional provisions - petitioner's grievance is with respect to 10% of the contract value which according to the contract, would become payable at a later date - Held that:- As per the interpretation of the Advance Ruling Authority and the Appellate Authority, no input tax credit would be available. NOTICE, returnable on 12.10.2018.
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2018 (9) TMI 971
Levy of GST/Service Tax - fee paid for grant of license sale of liquor for human consumption - Held that:- The prayer made in the present petition has been rendered infructuous and the same is disposed of accordingly.
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Income Tax
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2018 (9) TMI 970
Income derived from the sale of shares - “business income” OR “short terms capital gain” - Held that:- No reason to interfere with the impugned order passed by the High Court. The special leave petition is, accordingly, dismissed.
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2018 (9) TMI 969
Setoff of busniss loss - whether loss sustained in business can be set off against betting and gambling income; and only the net income is to be taxed under Section 115-BB? - Held that:- Identical question of law, for the assessment year 1998-99, was considered by the Division Bench of this Court in Commissioner of Income Tax vs. Dr. M.A.M.Ramaswamy [2015 (1) TMI 439 - MADRAS HIGH COURT] wherein appeal filed by the revenue was allowed and the substantial question of law was answered in favour of the Revenue and against the assessee by holding total winnings from betting of the assessee should be brought to tax at the rate of 40% as contemplated under Section 115BB of the Act. The order passed by the Tribunal, which affirmed the order of the Commissioner of Income Tax (Appeals), is liable to be set aside. Accordingly, the order passed by the Tribunal is set aside.- Decided in favour of Revenue.
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2018 (9) TMI 968
Reopening of assessment - non-reporting of the receipt of income on account of royalty - permanent establishment and attribution of income to the permanent establishment - validity of reason to believe - Held that:- A perusal of the figures in the statement furnished in respect of the income as reported in the original return of income and the return furnished u/s 148 leaves no doubt that there is huge difference and in this context it cannot be said that the notice u/s 148 is not supported by any valid reason or reasons proposing to re-open the assessment for the assessment years between 2004-05 and 2009-10. It is only after re-opening the matter and verification of the re-conciliation of royalty and FTS income as declared in the return u/s 147 with the TDS details of SIEL, the AO recorded that the Royalty/FTS income as offered to tax in such returns was acceptable. It cannot be said that there is no escapement of income from computation in the original returns of income filed by the assessee for the Assessment Years 2004-05 to 2009-10. It is only because the SIEL affected TDS on such Royalty, FTS income, whose benefit was availed by the assessee in the revised returns that no further tax liability was incurred though income escaping assessment got taxed in fresh proceedings. This aspect of non-reporting of the receipt of income on account of royalty is a valid ground for the Ld. AO to propose the reopening of the assessment, and it cannot be said that there was no escapement of income merely because tax was deducted at source on such income. When it is open under Explanation 3 to section 147 for the AO to reassess the income on any issue which newly comes to his notice subsequent to the issuance of notice under section 148 of the Act, it cannot be said that mere wrong mentioning of the provision of law relating to the other issues in the reasons recorded would vitiate the proceedings. We, therefore, reject the contention of the assessee that the reopening proceedings are bad under law. - Decided against assessee
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2018 (9) TMI 967
Disallowance of foreign education and training expenses of partner as being not related to the business of the firm - allowable busniss expenses - Held that:- After completion of the post graduate degree, the partner continued to work for the firm and materials were placed to show that several important contracts have been secured by the firm, which they attribute to the educational qualification and expertise acquired by the partner of the firm abroad. There was no material place by the Revenue to demonstrate that any part or whole of the stand taken by the assessee was either false or untrue. Viewed from this angle, this Court is fully satisfied that this is not a case where there is a misuse of the provision of Section 37 of the Act to foist a personal expenditure as a business expenditure. Therefore, we are of the considered view that the expenditure was allowable and the authorities concurrently erred in not taking into consideration the factual position placed, in spite of specific grounds raised before the Tribunal, which would render the decision perverse. Perusal of the grounds of appeal filed before the CIT(A) shows that the assessee has specifically raised the point regarding non-consideration of the materials placed before the assessing authority. Yet the CIT(A) did not make an endeavour to examine the stand taken by the assessee, resulted in non-consideration of the materials placed - Decided in favour of assessee
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2018 (9) TMI 966
Penalty u/s 271(1)(c) - expenditure of webhosting and misc. expenditure for website development - Held that:- when the assessee has come up with bonafide claim, even if it is not accepted, it would not per se tantamount to furnishing inaccurate particulars so as to attract the penalty proceedings u/s 271(1)(c) Furthermore, Incurring of ₹ 37,52,700/- by the assessee on share capital have also been duly explained by the assessee by debiting the same under head ‘legal and professional charges’. Assessee has suo-moto disallowed an amount of ₹ 7,00,000/- relating to increase in capital and RS.5,00,000/- pertaining to filing fees and ₹ 2,00,000/- on account of stamp duty in computation of income debited under the head rent, rates and taxes. All these facts go to prove that the assessee has come up with bonafide claim and even if the same is proved to be wrong, it cannot attract the provisions contained u/s 271 (1)(c) of the Act. AO/CIT (A) have erred in levying/ enhancing the penalty which is not sustainable in the eyes of law, hence ordered to be deleted. Consequently, appeal filed by the assessee is hereby allowed.
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2018 (9) TMI 965
Addition u/s. 68 - unexplained cash credit - investment out of his undisclosed source - employer used/mis-used the account of the assessee with his knowledge and signature - Held that:- The assessee has been mis-utilized by his employer to route the cash through his bank account. In such a scenario, rather than finding out the real beneficiary in the whole modus operandi, the AO failed to collect any material or at least could not expose any falsity in the averments submitted by the assessee u/s. 131 of the Act. In such circumstances making huge addition in assessee’s hand of the entire deposit of cash in his bank account which admittedly has got out of his bank account to some other beneficiary or layers through which the real beneficiary gets the ultimate benefit cannot be countenanced and not only that the department will not be able to recover the tax also from person of no means. Only if the real beneficiary is traced out the department will be able to recover the tax due to the State. So by making additions in wrong hands from whom tax cannot be recovered, help only the ultimate beneficiary and not even the department. Thus for the interest of justice and fair-play, we are inclined to delete the addition as ordered by the AO/Ld. CIT(A). The assessee’s bank account since used for deposit and transfer of cash is an activity for which a commission of 0.1% needs to be computed as the income of the assessee and the income on which the assessee has to be assessed to tax. With the aforesaid direction, we partially allow the appeal of the assessee - Appeal of assessee is partly allowed.
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2018 (9) TMI 964
TPA - benchmarking of the interest paid by the assessee to its AEs on the Fully and Compulsory Convertible Debentures (FCCDs) - Held that:- In view of the finding of a coordinate bench of this Tribunal in assessee’s own case for the immediately preceding years, we are of the considered opinion that the issue is no longer res integra and this bench is required to follow the same in the absence of any change of circumstances. No change of circumstances is pleaded before us. We, therefore, while respectfully following the above decision, reach a conclusion that it is reasonable on facts and also permissible under law to include 300 points basis while calculating the interest rate. In view of the fact that the variance does not exceed 5% for the FCCDs issued during the FYs 2008-09 and 3% for the FCCDs issued subsequently interference by the Ld. TPO with the value of the international transaction. The addition, therefore, cannot be sustained and shall be directed to be deleted. We accordingly direct the learned AO/TPO to delete the same.
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2018 (9) TMI 963
Benefit of section 11 - grant of registration u/s 12AA is pending decision before the Hon’ble Allahabad High Court and as such, status of the assessee corporation was held as “company” - Held that:- Hon’ble Allahabad High Court [2017 (7) TMI 1228 - ALLAHABAD HIGH COURT] has affirmed the order passed by the Tribunal affirming the registration accorded to the assessee company by the Commissioner. So, since the issue as to the registration granted to the assessee company u/s 12AA has been decided, we deem it necessary to set aside these cases to the file of the AO to decide afresh in the light of the fact that the assessee is registered under “non-profit making entity” under section 25 of the Companies Act and has been providing artificial limbs to the needy persons without earning any profit. AO shall provide an opportunity of being heard to the assessee before deciding the issue.
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2018 (9) TMI 962
Addition on account of trading result - enhancing the gross profit rate - Held that:- There is no substantial fall in the GP rate and the same has been increasing continuously. We also note that nothing specific has been brought on record by the Assessing Officer before making addition of extra 2% on account of GP rate. The Assessing Officer has not given any reasons for enhancing the gross profit rate except for mentioning that in the nature of business being carried on by the assessee, the net profit rate would vary between 5% and 7%. The method of accounting followed by the assessee was also being followed consistently since past many assessment years and financial results for the preceding assessment years were duly accepted by the department u/s 143(3) of the Act and no addition on account of difference in GP rate was made. It is apparent that this addition has been made merely on the basis of assumptions and guess work on the part of the Assessing Officer without bringing any cogent evidence on record - Decided in favour of assessee Addition on account of credit card expenses - CIT-A deleted the addition by observing that the Assessing Officer has not made any specific discussion or recorded any categorical finding regarding the credit card expenses - Held that:- Observation of the Ld. CIT (A) is correct. It is seen that the Assessing Officer has not pointed out even a single discrepancy in the details which were furnished before him by the assessee in respect of the credit card expenses. Therefore, in absence of any defect having been pointed out by the Assessing Officer, no disallowance could have been legally made. Therefore, we find no reason to interfere on this issue also and we uphold the order of the Ld. CIT (A) and dismiss the ground raised by the department. Addition on account of unconfirmed unsecured loans - Held that:- CIT (A) has given a categorical finding that the balance of ₹ 20,50,000/- pertains to unsecured loans which were brought forward from earlier assessment years and there was no transaction/s of raising fresh unsecured loans during the year under consideration. This fact is also verifiable from Form 3CD which has been filed by the assessee along with the tax audit report. The Ld. Sr. DR has also not been able to negate this factual finding of the Ld. CIT (A). Therefore, on facts, we find no reason to interfere on this issue - decided against revenue Ad hoc disallowance of salary, labour charges, repair and maintenance and staff welfare expense - Held that:- No personal element could be inferred to be involved in payment of salary and labour charges. It is also seen that the Assessing Officer has made the disallowance on the ground that the expenses remained unverifiable and that they may contain an element of personal nature. We are unable to agree with the findings of the Assessing Officer in this regard and agree with the observations of the Ld. CIT (A) that labour charges and salary expenses will not have an element of personal nature unless a specific finding has been recorded by the Assessing Officer in this regard. Therefore, we find ourselves in agreement with the Ld. CIT (A) on this issue also and we dismiss the ground raised by the department. There was no requirement on the part of the Ld. CIT (A) to call for a remand report from the Assessing Officer and we opine that the Ld. CIT (A) is entirely justified in proceeding to adjudicate the issues before him on the basis of facts which were before him and were also undisputedly before the Assessing Officer also. - Decided against revenue
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2018 (9) TMI 961
Service PE in India - Held that:- All the requisite conditions for attracting the mandate of Art. 5(2)(k)(i) stand satisfied inasmuch as I, there is furnishing of services including managerial services; ii. Such services are other than those taxable under Article 13 (Royalties and fees for technical services); iii. Such services are rendered within India; iv. Such services are rendered by the assessee through its employees; and v. such activities continued for a period of more than ninety days within twelve months period. We hold that JCB India constituted a service P.E of the assessee in India. The impugned order on this score is set aside and the view taken by the AO is restored. Rectification application u/s 154 - AO for granting complete credit of Tax Deducted at Source (TDS) and to rectify the interest inadvertently levied under Section 234A - Held that:- Assessing Officer passed the rectification order wherein complete credit of TDS was granted to the assessee and consequential interest u/s 234B was accordingly rectified. Also, the Assessing Officer rectified the interest inadvertently levied under Section 234A and the same was reduced to Nil. Further, interest under Section 234B, 234C, 234D & 244A are consequential in nature. Hence, Ground allowed for statistical purpose.
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2018 (9) TMI 960
Addition u/s. 68 - proof of transaction as genuine - Held that:- Assessee failed to prove the three ingredients of section 68, i.e., identity of the creditors, creditworthiness thereof and genuineness of the transactions. Simply because the assessee received the amounts through cheques would not prove the transaction as genuine, as the nature of amount, i.e., being refund of the amounts already paid as advance for purchase of machinery, as stated by the assessee, does not stand proved by any cogent evidence on record. Te decision relied by the assessee in the case of Real Time Marketing Pvt. Ltd.[2008 (4) TMI 8 - HIGH COURT OF DELHI] does not render any help to the assessee, as in the present case, the cash deposit in the bank accounts before issuing cheques, is not the sole ground for making addition u/s. 68 of the Act. As a result, the appeal of the assessee deserves to be dismissed. Penalty u/s 271(1)(c) r.w.s. 274 - non specification of charge - Held that:- As gone through the notice dated 30.11.2009 issued by the Assessing Officer u/s. 271(1)(c) r.w.s. 274 of the Act which contains the offense committed by assessee as “ concealed the particulars of income or furnished the inaccurate parties of such income”. In view of above narration of notice, the Assessing Officer was not specific as to the offense committed by the assessee. In the penalty proceedings, the Assessing Officer has imposed the penalty for concealing the particulars of income. Once, the Assessing Officer itself was not specific as to under which limb, the Assessing Officer was going to penalize the assessee or to seek explanation of the assessee, no penalty can be imposed against the assessee u/s. 271(1)(c) - Decided in favour of assessee
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2018 (9) TMI 959
Addition on bogus purchases - Held that:- Commissioner of Income Tax (A) was not correct in sustaining the disallowance to the tune of 25% of the alleged bogus purchase when the very basis on which the bogus purchases have been alleged to have been made does not stand in view of the retraction of statement by Shri Rajendra Jain as well as the voluminous documentary evidences which were filed by the assessee before the lower authorities and which substantiate the genuineness of the purchases from M/s Avi Exports. Under the circumstances, we are unable to concur with the findings of the lower authorities and we deem it fit to set aside the order of the Ld. Commissioner of Income Tax (A) and direct the Assessing Officer to delete the addition with respect to the alleged bogus purchases. - Decided in favour of assessee Addition on account of ROC fee - Held that:- In view of the order of the ITAT Mumbai Bench in the case of Navi Mumbai SEZ (P) Ltd. vs. ACIT [2015 (3) TMI 314 - ITAT MUMBAI] we deem it fit to restore the issue to the file of the Assessing Officer to examine the contention of the assessee that the incremental share capital was used for the purpose of working capital and, thereafter, allow the claim of the assessee if the assertion of the assessee is found to be correct, after giving proper opportunity to the assessee to present its case. Thus, this ground stands allowed for statistical purposes.
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2018 (9) TMI 958
Benefit of section 11 denied - activities of assessee are involved the rendering of services in relation to carrying on commercial or business activities and is clearly covered by the new proviso to section 2(15), therefore, the assessee cannot be treated to be engaged in charitable activities - Held that:- We find that the CIT(A) allowed the claim of exemption u/s 11 and 12 on the ground that in the immediately preceding assessment year, CIT(A) has allowed the claim of exemption u/s 11 and the Revenue has not challenged the same. In the immediately succeeding assessment year the Assessing Officer himself has allowed the claim of exemption u/s 11 by treating the activities of the assessee as charitable in nature. No infirmity in the order of the CIT(A) since in the immediately preceding assessment year the CIT(A) has allowed the claim of exemption u/s 11 which has attained finality and the Assessing Officer himself in the subsequent assessment year has treated the activities of the assessee as charitable in nature and has allowed the claim of exemption u/s 11 therefore, the order of the ld. CIT(A) is upheld and the grounds raised by the Revenue are dismissed.
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2018 (9) TMI 957
Disallowance of set off of loss of MEPZ (10M) unit against income of taxable unit - loss suffered by the assessee in the unit eligible for deduction u/s 10AA - Held that:- Keeping in view the fact that section 10AA makes the assessee eligible for deduction in the same manner, the deduction prescribed u/s 10A and 10B and it cannot be treated in the nature of exemption and as such, the loss suffered by the assessee in the unit eligible for deduction u/s 10AA can be set off against the normal business income. So far as question of amendment of section 10A is concerned, the Hon’ble Supreme Court in Allied Motors (P.) Ltd. vs. CIT [1997 (3) TMI 9 - SUPREME COURT] and CIT vs. Gold Coin Health Food (P.) Ltd. (2008 (8) TMI 5 - SUPREME COURT) has decided the identical issue by holding that, “when the amendment is curative in nature it has to be read from its inception.” So, we are of the considered view that the amendment of section 10A by way of inserting explanation is only declaratory in nature having retrospective effect. We are of the considered view that the CIT (A) has taken valid, legal and plausible view that the deduction is to be allowed from the total income of the unit and not from the total income of the assessee under Chapter IV of the Act and not at the stage of total income under Chapter VI of the Act. So, ground no.1 is determined against the Revenue. Depreciation @ 60% on computer software - Held that:- CIT (A) has granted the relief in accordance with the settled principles of law by holding that, “the E-TDS software, E-scan, antivirus attachment control, ME&S Software upgrade are clearly in the nature of routine software for the purpose of antiviral control and for upgrading the existing software” and held the same to be revenue in nature and on the balance amount of ₹ 16,45,000/- directed the AO to allow the depreciation @ 60%. Assessee has not preferred to challenge the findings given by the ld. CIT (A) by filing cross appeal. No illegality or perversity in the findings of CIT (A), ground is determined against the Revenue.
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2018 (9) TMI 956
Eligibility to deduction of Profits in terms of Section 80-IA(4)(iii) - Approval as granted by the Ministry of Commerce and Industry, Govt. of India - Held that:- As decided in assessee's own case once approval was granted by the Ministry of Commerce and Industry, Govt. of India to the assessee, the CBDT was duty bound to notify the Industrial Park / STP for benefits under section 80 IA of the Act, without any further investigation as to whether the assessee had complied with the terms and conditions envisaged in the scheme. In the light of the decision in the case of Creative Infocity Ltd. (2012 (4) TMI 117 - GUJARAT HIGH COURT ), we find substantial merit in the contention of the assessee that the Notification to be issued by CBDT is only a formality once the approval is granted by the Ministry of Commerce & Industry, Govt. of India, and, therefore, hold that once the CBDT Notification is issued, the assessee is entitled to the benefits under section 80 IA (4)(iii) from the date of approval by Ministry of Commerce and Industry, Govt. of India, subject to the compliance of the terms and conditions specified therein. There is nothing to suggest that the benefits of the deduction under section 80 IA (4)(iii) of the Act are available only from the date of Notification by the CBDT. We, therefore, hold that the assessee is entitled for deduction under section 80 IA (4)(iii) of the Act for both Assessment Years 2007-08 & 2008-09; the two years under consideration - Decided in favour of assessee
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2018 (9) TMI 955
Denial of deduction u/s 10AA on interest on FDR - addition treating the interest as income from other sources not eligible for deduction under section 10AA - Held that:- Assessee has now filed the additional evidence in the shape of sanction letter of the Bank granting term loan and working capital credit limit to the assessee. The said sanction of loan is subject to the condition that the assessee should make FDR equivalent to 15% of the cash generated by the assessee. The issue to the record of the AO for consideration of additional evidence filed by the assessee which is relevant for determination of the issue of allowability of the claim under section 10AA of the Act. Hence in view of the earlier order of this Tribunal, we set aside the matter to the record of the AO for readjudication of the same after considering the additional evidence filed by the assessee and in the light of the various decisions on the issue.- Decided in favour of assessee for statistical purposes.
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2018 (9) TMI 954
Denial of registration u/s. 12AA - assessee, a franchisee of a corporate entity, is running an educational institution in pursuance to object clause 4(a) of it’s MOA - Revenue’s prime objection is that the assessee is running its’ school (educational institution) on commercial lines with a view/object to earn profit, and its’ activities cannot therefore be regarded as driven by the purpose of providing ‘education’ - Held that:- We are conscious that ‘education’ is a ‘charitable purpose’ per se, so that the assessee’s activities, to be regarded as in satisfaction thereof, do not necessarily have to be targeted to serve or educate the poor. However, we have to necessarily read the objects as they are, being the premise with which the society has been established, exhibiting the intention of its’ founder/promoter/s, the stated purpose of its’ existence. In view of the foregoing, only consider it proper to restore the matter back to the file of the competent authority to allow the assessee an opportunity to exhibit its’ activities as being undertaken toward and in satisfaction of its stated object/s, which no doubt constitute a charitable purpose under the Act. Assessee’s appeal is allowed for statistical purposes.
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2018 (9) TMI 953
Expenditure of rent paid to Rajasthan State Warehousing Corporation by invoking the provisions of section 40(a)(ia) - Allowing the said claim while passing the assessment under section 143(3) is a mistake apparent on record which was rectified by the AO while passing the impugned order under section 154 - Held that:- Since the rent was paid to the Rajasthan State Warehousing Corporation, therefore we find merit in the contention of the ld. A/R that said amount was certainly considered for computing the total income and filing the return of income by the RSWC. Therefore, if the said amount was already considered by the recipient while computing its total income and filed the return of income, then in view of the second proviso to section 40(a)(ia) which has been held as applicable retrospectively by the various decisions of Hon’ble High Courts including the decision of CIT vs. Naresh Kumar (2013 (9) TMI 275 - DELHI HIGH COURT) no disallowance is called for. Hence without going into the other contention raised by the ld. A/R, we find that if the said amount of rent has been considered by the RSWC in its total income while filing the return, then no disallowance shall be made under section 40(a)(ia) of the Act. Accordingly we direct the AO to verify this fact and then decide the issue in the light of the above observations and binding precedents.
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2018 (9) TMI 952
Computation of work-in-progress - non rejection of books of accounts - whether where the books of account of the assessee were audited and the said audited books of account have not been rejected, can the addition or disallowance be made in the hands of assessee, on the basis of any reference made to the DVO - Held that:- Applying the said ratio laid down by the Hon'ble Supreme Court in Sargam Cinema Vs. CIT (2009 (10) TMI 569 - SUPREME COURT OF INDIA) to the facts of the present case, we hold that where the Assessing Officer has failed to reject the books of account of assessee, then no reference could be made to the DVO for verifying the cost incurred for the project ‘The Mall’. The assessee in any case had debited the said expenditure to the head ‘Work-in-progress’, which has to be set off against the income in later years. There is no merit in the order of Assessing Officer in disallowing the said expenditure as not allowable. CIT(A) has erred in directing the Assessing Officer to verify the genuineness of expenditure once again in the year in which the impugned expenditure was set off against income recognized, if any. Such an action is not warranted, since it is based on the report of the DVO, for which reference was made without rejecting books of account. Accordingly, we reverse the finding of CIT(A). The grounds of appeal raised by the assessee are thus, allowed.
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2018 (9) TMI 951
Validity of assessment framed u/s 153C - period of limitation - assessment beyond period of six years - Held that:- Search on the Ashoka Group of cases was conducted on 20.04.2010. The proceedings under section 153C were initiated against the assessee by recording satisfaction on 11.07.2012 and issue of notice under section 153C of the Act was on 11.07.2012 i.e. assessment year 2013-14. In case, the period of preceding six years is calculated, then same falls within assessment years 2007-08 to 2012-13. The assessment under section 153C has been initiated against the assessee for assessment year 2005-06 also, which admittedly is beyond the period of six years. We hold that the assessment proceedings initiated for the instant assessment year are beyond the period available under the proviso to section 153C of the Act read with proviso to section 153A of the Act. The Assessing Officer thus, had no jurisdiction to take up the proceedings for the captioned assessment year - Decided against revenue
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2018 (9) TMI 950
Disallowing the claim of TDS where the income against which was offered to tax in financial year 2008-09 - Held that:- Hon’ble High Court of Punjab & Haryana in CIT Vs. Abbott Agency (2013 (10) TMI 1173 - PUNJAB AND HARYANA HIGH COURT) while interpreting provisions of the Act held that where the payee had shown the amounts received in its accounts books for the relevant assessment years and where the said payee proves that TDS certificate, issued late, pertained to receipts reflected in the accounts books of earlier years, then the assessee is entitled to claim the benefit of tax deducted at source in the succeeding year, where the TDS certificates were issued late. Applying the said principle to the facts of the present case, we hold that the assessee having offered the income in assessment year 2009-10, is entitled to claim the benefit of tax deducted at source out of such receipts in assessment year 2010-11, since the TDS amount was booked by the deductor in the said year and not in the preceding year. Accordingly, we direct the Assessing Officer to allow the benefit to the assessee. - Decided in favour of assessee Addition of an amount received as advance - assessee having booked the receipts in the succeeding years, can the same amount be added in the hands of assessee - Held that:- The assessee had claimed that it had received sum of ₹ 9,73,000/- as advance from Spicer India Ltd, which was kept as advance and the same was offered to tax in assessment year 2011-12. TDS was deducted out of such amount but the assessee had not claimed the benefit of TDS either in assessment year 2010-11 or 2011-12. The sale bills have been booked in assessment year 2011-12 and the assessee has also filed on record the copy of account of Spicer India Ltd. for the year under appeal and the same very clearly reflects that the receipts from the said parties. Where the assessee not even has claimed the benefit of TDS for the year under consideration, there is no merit in the orders of authorities below in treating the advance received against the project by the assessee from M/s. Spicer India Ltd., as receipt of the current year. Reversing the order of CIT(A), we delete the addition - Assessee appeal allowed.
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2018 (9) TMI 949
Additions on account of professional fees paid to a member of the assessee Association of Person [AOP] - CIT(A) concluded that the income was transferred without actual receipt of any services and ITD was merely name lending entity and therefore the payments under question were mere appropriation of profits - business expediency - Held that:- Upon perusal of documents on record, we find that the entity namely ITD was merely a name lending entity whose association was vital to the award of the contract. The whole responsibility / obligations arising out of the contract lay on the other entity, which is also not in dispute. No material has been placed on record to suggest that ITD has provided any real services under the contract except lending its association / name against which it has been paid impugned leadership fees @3.5%. The assessee, all along has justified the same on the ground of commercial expediency. However, we find that the assessee was an AOP and the provisions of Section 40(ba) specifically disallow payment made by AOP to its member on account of interest, salary, bonus, commission or remuneration, by whatever name called. Secondly, upon careful consideration of the factual matrix, we find that the impugned payment were mere appropriation of profits and could not be allowed as a deductible expenditure. The share of the contract receipts was predetermined and the same was nothing but the profit sharing ratio only. So far as the contentions that no such additions have been made in earlier AYs, we find no strength in the same since each AY was independent unit of assessment and the principle of res-judicata were not applicable to income tax proceedings. - appeal dismissed
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2018 (9) TMI 948
Disallowance of expenses relatable to exempt income invoking the provisions of section 14A r.w.r. 8D - Held that:- As compared the investments earlier to this year and find in the immediate preceding year i.e. as on 31-03-2009 investment to the tune of ₹ 71,45,14,402/-, which ultimately reduced in this year to ₹ 20,73,35,924/-. Accordingly we presume that no interest bearing loans have been invested in these investments. The assessee is having interest free funds available with the assessee in the shape of shares capital and reserve surplus to the tune of ₹ 235,49,56,327/- as against the available funds at ₹ 149,41,49,811/- in the immediate preceding year. We agree with the argument of the assessee that in the immediate preceding year the interest expenses paid by assessee to PCFC and PSFL amounting to ₹ 5,46,97,902/- has already been considered in earlier year and finding is given by the Tribunal in assessee’s own case that the same has been invested in the business of the assessee. In view of the above, we are of the view that only proportionate disallowance on the interest on loan taken from Infoline Finance Ltd. of ₹ 67,30,620/- can be considered for making disallowance under the formula prescribed under Rule 8D(2)(ii) of the Act. AO will only verify the figures and restricted the disallowance only on proportionate interest. This issue of assessee’s appeal is decided in favour of assessee subject to above direction. Disallowing set off of carry forward business loss from trading activity in shares by treating the same as speculation loss - Held that:- Tribunal in earlier year has treated the loss from trading activity in shares as speculation loss and that finding has neither been challenged by Revenue nor by Assessee. Once, the finding of fact is final, the only alternative left is that the loss is to be considered as speculation loss. Once the loss is considered as speculation loss, the same is to be set off against the business loss from trading activity of shares treating the same as speculation loss in view of the decision in the case of Lokmat Newspapers P. Ltd [2010 (2) TMI 94 - BOMBAY HIGH COURT] as held that once the assessee is carry on a speculative business and the profit and gains after arising from that business during the course of assessment year, the assessee is entitled to set off the losses carried forward for a speculation business arising out a previous assessment year - direct the AO to allow this speculation loss against the income earned form trading in shares. - Decided in favour of assessee
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2018 (9) TMI 947
Disallowance u/s 14A read with Rule 8D under normal provisions of the computation of Income under the Act - Held that:- Restore the matter back to the file of the AO for deciding afresh the disallowance warranted under Rule 8D having regard to the guidelines laid down by the Hon’ble Supreme Court in the case of Godrej And Boyce Mfg. Co. Ltd. [2017 (5) TMI 403 - SUPREME COURT OF INDIA] and Maxopp Investment Ltd vrs. CIT (2018 (3) TMI 805 - SUPREME COURT OF INDIA). Accordingly, this ground is allowed for statistical purposes. Addition u/s. 14A r.w.r. 8D(2) to the total income of the assessee u/s. 115JB - Held that:- We also restore the matter back to the file of AO with a direction to re-compute the income u/s.115JB in terms of our above discussion, following the proposition laid down by Special Bench of the Tribunal in case of Vireet Investment Pvt. Ltd.,[2017 (6) TMI 1124 - ITAT DELHI]
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2018 (9) TMI 946
Rectification of mistake u/s 154 - invoke Rule 27 of the ITAT Rules to raise a preliminary issue challenging the invocation of provisions of section 154 - issue relating to the computation of book profit under section 115JA as within or beyond the scope of section 154? - Held that:- The scope of Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 is limited and the respondent in an appeal before the Tribunal can invoke the said Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 only to support the order appealed against on any of the grounds decided against him and cannot seek any further or more relief than what has been granted to him by the ld. CIT(Appeals). We, therefore, find no mistake in the order of the Tribunal dated 23.06.2017 (supra) in not granting such more relief to the assessee by relying on Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963. In our opinion, there is thus no mistake much less a mistake apparent from record in the order of the Tribunal dated 23.06.2017 (supra) as alleged by the assessee in the present Miscellaneous Application. We, therefore, dismiss this Miscellaneous Application filed by the assessee being devoid of any merit. Miscellaneous Application filed by the assessee is dismissed.
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2018 (9) TMI 886
Validity of proceedings u/s 153C - period of limitation - completion of proceedings against the assessee, who is ‘other person’ than searched person - Held that:- As relying on RRJ Securities Ltd. case [2015 (11) TMI 19 - DELHI HIGH COURT] we hold that assessment proceedings initiated for assessment years 1999-2000 to 2001-02 are beyond the period of available under the proviso to section 153C read with proviso to section 153A of the Act and hence, the Assessing Officer had no jurisdiction to take up proceedings for the captioned assessment years. We hold that initiation and completion of proceedings against the assessee, who is ‘other person’ than searched person, is both invalid and bad in law. - decided in favour of assessee
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Customs
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2018 (9) TMI 939
Effective alternative remedy - Misuse of Tariff Rate Quota Scheme in the import of popcorn maize by M/s.Haji Sattar & Sons, Chennai - Section 129 A(1) of the Customs Act, 1962 - Held that:- We are not inclined to interfere with the impugned judgment - SLP dismissed.
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2018 (9) TMI 938
Incremental Exports Incentivization Scheme - Limit brought in monetary limits vide Notification dated 23.09.2014, with retrospective effect - Held that:- The impugned communication dated 23.09.2016, whereby the respondent/Directorate General of Foreign Trade have restricted the entitlement to ₹ 95,00,000/- only, as against the petitioner’s claim to the tune of ₹ 33,68,02,996.70/- is held to be without jurisdiction, arbitrary, illegal and capricious and contrary to the provisions of the Policy and the Handbook of Procedures - petition allowed.
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2018 (9) TMI 937
Import of restricted goods - Scrap/ second hand goods - imposing an exemplary redemption fine and penalty without considering the margin of profit - Principles of Natural Justice - Held that:- In the present case the impugned order has been passed without considering the margin of profit, which is normally considered while imposing the redemption fine and penalty - the differential duty in the present cases in all the three bill of entries is less than 1 lac. The ratio of the Darshan Singh & Company Vs. Commissioner of Customs, [2014 (10) TMI 842 - CESTAT NEW DELHI] is applicable in the present case, where it was held that as evidence of margin of profit is not available therefore by adopting criteria of differential duty, quantum of redemption fine reduced, thus redemption fine and penalty can only be imposed after considering the margin of profit - Further, the redemption fine and penalty imposed in the present case is highly exorbitant and is liable to be reduced. Appeal allowed in part.
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2018 (9) TMI 936
Concessional rate of duty - N/N. 12/2012 dated 17.3.2012 - Classification of imported goods - Shea Butter ultra refined - classified under Customs Tariff heading No. 1515 9091 of schedule I to Customs Tariff Act 1975 or otherwise - Only ground of the department for denying them the notification benefit is that since the imported consignment was meant for manufacturing of cosmetics. Held that:- It can be seen that the imported consignment of the Shea Butter Ultra Refined is classifiable under Chapter sub heading 1515 90 91 of the Customs Tariff Act, 1975. From the perusal of the Bill of Entry, it is seen that the importer appellant has correctly declared the consignment while filing Bill of Entry for clearance of Shea Butter Ultra Refined. It has been contested that M/s. HallStar, who are supplier of the imported consignment has provided a certificate that the imported consignment is of Shea Butter Ultra Refined of edible grade. Thus, on the basis of this certificate that the subject consignment is of refined and edible shea butter, they have claimed benefit of notification No. 12/2012 under Sl.No. 58 - since the notification does not have any condition of end use, therefore even if the consignment is being used in the cosmetic industry which is of refined edible grade, the benefit of notification giving concessional rate of Customs duty cannot be denied to the appellant. The importer appellant is entitled for benefit of concessional rate of Basic Customs Duty under Notification No. 12/2012 dated 17.3.2012 at S.No. 58, being consignment of Shea Butter which is of both refined and edible grade‟ - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 935
Rectification of Mistake Application - Review of Order - Held that:- Since the final order was pronounced and dictated in the presence of the ld. Advocate, the RoM cannot be entertained, since it amounts to review of the final order which is not permissible in law - ROM Application dismissed.
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2018 (9) TMI 934
Imposition of penalty under Regulations 18 & 20 (7) of the Customs Brokers Licensing Regulations, 2013 - The only infraction found against the customs broker is that they have not verified the KYC norms as per the Regulation 11 (n) ibid - Held that:- Case law of HIM Logistics Pvt. Ltd. [ 2016 (4) TMI 971 - CESTAT NEW DELHI] will apply on all fours to the case at hand - There is only so much that a customs broker can do for verification of antecedents. In fact there are many cases where fraudulent importers or exporters have used even forged documents including forged IEC and other KYC documents to avail unintended benefits in import and export, while no doubt the customs broker is expected to remain vigilant and undertake the verification of documents etc. as also comply with the other obligations cast on him under Regulation 11, he cannot be expected to cause in-depth detective investigation well that is beyond his capacity. Penalty unjustified - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2018 (9) TMI 941
Termination of employee on termination of project - whether the closure was bona fide act with a drying up of funding by the Ministry of Human Resources Development, Government of India? - Held that:- In the written statement, it has been explained that services of the petitioners have not been dispensed with on account of the allegations of not performing their duties to the satisfaction of the Project implementors, rather the entire project has been closed down on the directions of the Central Social Welfare Board, New Delhi. The question whether the services rendered by the petitioners were satisfactory or not, the fact still remains and stares at the face that the Project in which they worked was closed down rendering the petitioners surplus. If the petitioners insist in the amended petition that they were 'workmen' within the meaning of term in the Industrial Disputes Act, 1947, then law requires only closure compensation to be paid to them. Right to reinstatement would not exist. It is also not that the posts have been abolished, rather the Project has been closed down and they cannot claim an alternative job on closure of the Project as a matter of right. Closure of an industry would not attract the provisions of Section 25-F of the Industrial Disputes Act. See MANAGING DIRECTOR, HARYANA SEEDS DEVELOPMENT CORPN., LTD. VERSUS PRESIDING OFFICER AND ORS. [1997 (7) TMI 689 - SUPREME COURT] and more specifically in the case of Amar Singh [2003 (4) TMI 591 - SUPREME COURT] on the issue of Project employees and their rights. No justification in accepting this petition. The writ petition is dismissed. However a direction is issued to the respondents, that in case any amount is found due or owing to the petitioners as far as CPF, leave encashment and gratuity are concerned, the same be paid to them since it is the admitted position in para.10 of the reply on merits. If unpaid, these amounts be calculated and disbursed to the petitioners with 6% interest per annum within a period of three months from the date of accrual.
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2018 (9) TMI 940
Breach of trust by trustee by selling the assets of the Company - oppression and mismanagement - sale of immovable property - value of the property and the buildings of the R1 company when it was sold to the R7 Company - Held that:- Respondents 2 to 6 have sold their entire shareholding to the R7 Company. They have also sold the properties shown in the last available balance sheet for the year 31.03.2001 of the 1st Respondent Company. The admitted facts of the present matter show not only oppression on the part of original Respondents 2 to 6 but also mismanagement as in the name of clearing loans, the whole Company itself has been transferred without letting the other shareholders know. The present appeal being continuation of the original Company Petition, we can exercise powers which were required to be exercised by the learned NCLT under Sections 241 and 242 of the Companies Act, 2013 read with Rule 11 of the National Company Law Tribunal Rules, 2016 as well as Rule 11 of National Company Law Appellate Tribunal Rules, 2016. At present, passing of Orders of winding up the Company would unfairly prejudice members, but otherwise the facts justify the making of a winding up order considering the acts committed by the Appellants. If in spite of the efforts as per Order we propose to pass don’t succeed, NCLT may consider directing steps for winding up. The ends of justice require this Appellate Tribunal to pass necessary orders although these orders are required to be passed against the Appellants who have come up in the appeal as we find that this is necessary in the interest of the Company which was established by late Shri M.A. Shanmugam. Order: - We maintain direction 1 issued by the learned NCLT in the Impugned Order that an Independent Auditor should be appointed to carry out audit as proposed by the learned NCLT. The fees of the Auditor to be appointed by NCLT shall be borne by the original Respondent No.1 Company. The other directions 2 to 6 of the Impugned Order are quashed and set aside. We quash and set aside the shares transferred by original Respondents 2 to 6 in favour of three persons - 1) Kumaravel Varatha Rajan, 2) Jayanthi Kumaravel and 3) Manikandan Kumaravel. We restore the shareholding of the Company as on 29.09.2011. We declare that the sale deed dated 31.10.2011 executed by original Respondents 2 to 6 in favour of original Respondent No.7 as not binding on the Respondent No.1 Company. The NCLT shall immediately appoint an Administrator to take over the land and structure of the Respondent No.1 Company and to manage the affairs of the Company. The NCLT is requested, under Section 242(2)(k) of the Companies Act, 2013, to appoint such number of persons as Directors of the Respondent No.1 Company as it finds appropriate to manage the affairs of the Company under supervision of the Administrator and to ensure holding of free and fair EOGM for the shareholders to decide future course of action for the Company. It would be open for learned NCLT to later consider, if necessary, if Orders of winding up need to be passed.
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Insolvency & Bankruptcy
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2018 (9) TMI 945
Corporate Insolvency Resolution Process - control of nominee directors - Eligibility to submit ‘Resolution Plan’ in terms of Section 29A - ‘Committee of Creditors’ has not followed the procedures under Section 30(4), partly allowed the applications directing the ‘Resolution Professional’ and the ‘Committee of Creditors’ to revisit and reconsider their decision in the light of proviso to Section 29A (c) read with proviso to Section 30(4) of the ‘I&B Code'- Held that:- Admittedly, there are three nominee Directors of ‘AM India Ltd.’ in ‘KSS Petron’, one of the NPA Company. The nominee Directors of the Appellant- ‘AM India Ltd.’ had also resigned on 9th February, 2018 i.e. three days’ before the submission of the ‘Resolution Plan’. Therefore, it is clear that the ‘AM India Ltd.’ had complete control over the ‘KSS Petron’. As informed that after impugned order passed by the Adjudicating Authority, the ‘AM India Ltd.’ had made conditional deposit of ₹ 7,000 Crores in its own current account (Escrow Account). Such depositation of the amount in its own Escrow Account does not qualify as a payment of overdue amounts in terms of proviso to clause (c) of Section 29A. A conditional offer to pay the over dues amount cannot be accepted till it is complied in the light of proviso to clause (c) of Section 29A unconditionally. Dr. Abhishek Manu Singhvi, learned Senior Counsel appearing on behalf of ‘AM India Ltd.’ when asked, on instruction, submitted that if this Appellate Tribunal accept the ‘Resolution Plan’ submitted by the ‘AM India Ltd.’, it may deposit the non-performing assets amount with interest in the respective accounts which were declared as NPA in accordance with the guidelines of the Reserve Bank of India. As we hold that ‘AM India Ltd.’ is also entitled to the benefit of second proviso to sub-section (4) of Section 30, we give one opportunity to the ‘Resolution Applicant’- ‘AM India Ltd.’ to make payment of all overdue amount with interest thereon and charges relating to Non- Performing Accounts of both the ‘Uttam Galva’ and the ‘KSS Petron’ in their respective accounts within three days i.e. by 11th September, 2018. If such amount is deposited in the accounts of both Non-Performing Accounts of ‘Uttam Galva’ and ‘KSS Petron’ within time aforesaid and is informed, the ‘Committee of Creditors’ will consider the ‘Resolution Plan’ submitted by ‘AM India Ltd.’ along with other ‘Resolution Plans’, including the ‘Resolution Plan’ submitted by the ‘Numetal Ltd.’ on 29th March, 2018, and if so necessary, may negotiate with the ‘Resolution Applicant(s)’. An early decision should be taken by the ‘Committee of Creditors’ and on approval of the ‘Resolution Plan’, the ‘Resolution Professional’ will place the same immediately before the Adjudicating Authority who in its turn will pass order under Section 31 in accordance with law. The ‘Successful Resolution Applicant’ will take steps for execution of its ‘Resolution Plan’ and deposit the upfront money if proposed, in terms of the ‘Resolution Plan’. We direct the Adjudicating Authority to exclude the period the appeal was pending before this Appellate Tribunal i.e. from 26th April, 2018 till today (7th September, 2018) for the purpose of counting the total period of 270 days. The impugned order dated 19th April, 2018 passed by the Adjudicating Authority so far as it relates to eligibility of ‘Numetal Ltd.’ as on the date of the submission of the ‘Resolution Plan’ dated 29th March, 2018 is set aside. The impugned judgment/order in respect to ‘AM India Ltd.’ is affirmed with conditions as mentioned in the preceding paragraphs. All the appeals are disposed of with aforesaid observations and directions. The parties will bear their respective cost.
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2018 (9) TMI 944
Application filed u/s. 7 of the Insolvency and Bankruptcy Code, 2016 - Proof of existence of default - Whether the application is not maintainable as alleged by the respondent? - Whether there is default in repayment of the loan as alleged? - Held that:- Considering the peculiar circumstances that the applicant and corporate debtor were sister concern, that applicant and respondent are brothers, that there was a family settlements finalized into an award and that an execution of the award is pending before the Hon’ble High Court at Culcutta, and the applicant is prohibited from altering the status quo with regard to the business, properties and assets in the possession of applicant company it appears to me that it is unjust and unfair to proceeds with the case in hand. The status quo order also would applicable to the assets of corporate debtor. In case this application is found liable to be admitted it would defeat the very purpose of execution of the award. Moreover the passing of resolution by removing the existing directors is also under challenge before the company court as well as before the magistrate Court. The above said factors proves that the applicant filed this application without clean hand and suppressing material facts and hence it appears to me that this application is not maintainable because of the order of status quo is in force. This point is answered accordingly. As per Section 7(3) of the I & B Code, 2016 the burden is heavy on the side of the financial creditor to prove the existence of a default. In a case of this nature a financial creditor can succeed only if he proves the existence of a default. In order to initiate Corporate Insolvency Resolution Process a financial creditor has to satisfy the ingredients to be proved under sub-section (3) of Section 7 of the I & B Code, 2016 Proof of existence of default from the record of information utility or such other record or evidence of default as may be specified shall be produced by the applicant. Evidence other than the information utility can also be produced in a case of this nature. But here in this case proof of default not at all produced on the side of the financial creditor. That being so the applicant herein in this case also failed to prove existence of a default. For the aforesaid reasons the application is liable to be rejected.
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2018 (9) TMI 943
Corporate Insolvency Resolution Process - evidence of existence of dispute - Held that:- The cheque issued by the respondent were not credited in the account of the applicant. The corporate debtor did not make payment after receiving the demand notice u/s 8 (1) of IB Code and default on the side of the respondent stand proved in this case. The petitioner is therefore found entitled to initiate corporate insolvency resolution process as against the Respondent. Also matter of record that Operational Debt owed by Corporate Debtor is of more than One lakh Rupees. The Corporate Debtor failed to file any reply or raise any dispute within ten days from the date of receipt of Demand Notice, as mandated under section 8 (2)(a) of the Code. There is no evidence of existence of dispute between Operational Creditor and Corporate debtor regarding outstanding debt. Petitioner, in this case, has complied with section 9 (3) (b) and 9(3)(c), and affidavit to the effect that there is no notice given by the corporate debtor relating to dispute has been filed. As the petitioner fulfils the required criterion for invoking CIRP under Section 9 of the Code, thus petition is liable to be admitted. The Operational Creditor had not received the outstanding Debt from the Corporate Debtor, and the requirements as prescribed under I&B Code have been completed by the Petitioner. Thus we are of the view that this Petition deserves ‘Admission’. Petition filed by petitioner U/S. 9 of the I&B Code is admitted.
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2018 (9) TMI 942
Liquidation of the assets of the Corporate Debtor - Corporate Insolvency Resolution Process (CIRP) - Held that:- Resolution Professional has filed the Miscellaneous Application falling under Section 33(2) of the I&B Code, 2016, to liquidate the Corporate Debtor. A perusal of the of the Minutes of the Meeting of CoCs dated 03.07.2018 reveals during the CIRP, the CoCs has decided to liquidate the Corporate Debtor, the intimation of which has been given by the Resolution Professional by filing the present MA. In view of the facts and circumstances recorded by Resolution Professional in the Miscellaneous Application and the resolution passed by the CoCs as referred hereinabove, this Authority in exercise of powers conferred under Sub-Clauses (i), (ii) and (iii) of Clause (b) of Sub-Section (1) of Section 33 of the I&B Code, 2016, proceed to pass Order. This Authority order for liquidation of the Corporate Debtor viz., M/s. Associated Cylinders and Accessories Private Limited, which shall be conducted in the manner as laid down in Chapter III of Part II of the I&B Code, 2016. This Authority appoints the Resolution Professional viz., Mrs. SatyadeviAlamuri as Company Liquidator, who shall issue a public announcement stating therein that the Corporate Debtor is in liquidation;
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FEMA
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2018 (9) TMI 933
Charge under Regulations 8, 9 & 13 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 and Regulations 3(1) and 3(2) of Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000 read with Section 42 of FEMA, 1999 - Bill of Lading (B/L) relevancy - Held that:- Two sets of documents available for the same shipment under the same B/L nos. While the appellants have claimed one to be genuine, the respondents have claimed the other to be genuine. From the impugned order no investigation done even to establish which was the correct B/L. The adjudication order does not even deal with the Indian High Commission or EFCC, Nigeria’s letter even though it was mentioned before him during the personal hearing. Enquiries from the Steamer Agent M/s. Arebee Star Maritime Agencies Pvt. Ltd. was also done and the Branch Manager was summoned to appear before the Assistant Director, Enforcement Directorate, Chennai, wherein he stated that they were making enquiries with regard to discharge of shipments at Lagos when it was destined for Russia, and that as soon as they get any evidence regarding the same he would furnish it. However, in the entire order there is no further mention of the result of enquiry. It a case to be remanded back to the adjudicating authority to go into all the issues including the veracity of the B/L and pass a speaking order after affording an opportunity to the appellants.
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2018 (9) TMI 932
Contravention of the provisions of the FERA Act - accepting interest free security deposit of 65 lacs from the branch office of M/s DNV located in Mumbai, as the Regional Manager of M/s DNV had taken up the flat bearing no. No.24 on 20th floor, Kanchanjunga Mumbai for 36 months which belonged to Appellant's brother and sister-in-law and who had signed a Power of Attorney dated 21.05.1987 in favor of Appellant - Held that:- It appears from the reading of agreement and fact and circumstances, it was merely a care taker agreement for 3 years. From the very wordings that the lease could be granted means that the transaction of the lease would be totally exempted from the general or special permission of RBI. The agreement had no provision for any forfeiture of the said amount or part thereof. The benefit of doubt goes in favour of the appellant because as per facts of the present case, it would be that any security deposit taken for fulfillment of the terms and conditions would not attract any general or special permission of RBI to be taken. The impugned order is not sustainable as the said caretaker agreement to be a lease agreement and likewise as security deposit as consideration, as the terms „receipts and payments‟ visualized in section 9 (1) (b) & (d) of the FERA Act means consideration. It is merely in the case of lease agreement that vested right is created in favor of lessee but in the present case no vested right is created as the said caretaker agreement is only a leave and license agreement and thus the Appellant had temporary lien over the said security deposit. The appellant had no relation with the accused person to whom the appellant has only allowed to use the property of the owner/landlord. The appellant has no criminal record for any offence or have any link and nexus with the (then tenant) directly or indirectly to criminal activities. The money paid by him never transferred outside India. Thus, there is no contravention of any provision committed by the appellant. It is stated on behalf of the respondent during hearing that payment of monthly compensation was payable at the rate of ₹ 9000/- per month but the same was not a subject matter of Memorandum. Therefore, there was no contravention of the provisions of the FERA Act. And also of the Section 9(1) (b) which stipulates in the explanation to the Section that the money has to come from outside India.
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PMLA
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2018 (9) TMI 931
Application for interim stay under section 35 of PMLA Act - provisional attachment order - Held that:- The suggestion was made on the last few dates that the attachment order already passed in respect of Room No. 39, 3rd Floor, Ambulkar Sadan, Gokhale Road, South Dadar, Mumbai-400028 may continue till the final outcome of the criminal complaint which is pending before the Special Court. The counsel for the respondent has no objection. The counsel for the appellant states that this Order may be passed without prejudice to the right and contention of the appellant. The counsel for the appellant agrees to deposit ₹ 181/- per month with the respondent till the final outcome of the matter before the Special Court. The said suggestion is agreeable to the learned counsel for the respondent. The appeal is disposed of. In case the proceedings pending before the Special Court are decided in favour of the appellant, who would be entitled to file appropriate application as well as refund of the rental amount which is being deposited as user and occupation charges as well as release of flat in question.
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Service Tax
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2018 (9) TMI 924
Franchise Service - Management Consultancy Service - Manpower recruitment or supply agency service - Held that:- There is no merit in the appeal - Admission is refused and the civil appeal is, accordingly, dismissed.
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2018 (9) TMI 923
Condonation of delay in filing appeal - CENVAT Credit - duty paying invoices - improper documents - Held that:- There are no merits in the present Special Leave Petition - SLP dismissed.
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2018 (9) TMI 922
CENVAT credit - common input services used in providing both taxable and exempted services - non-maintenance of separate records - Rule 6(3) of CCR - Held that:- The learned Commissioner has not appreciated the evidence put forth by the appellant regarding the maintenance of separate accounts. It is on record that in respect of each of the appeals, the appellants have produced a Chartered Accountant certificate which certifies the maintenance of accounts by the appellants. The appellants have maintained separate records and as such, there is force in the arguments made by learned counsel for the appellant-assessee. However, on going through the summary submitted by the counsel for the appellants, we find that there is an amount of ₹ 29,24,565/- which remains to be reversed by them. Appeal allowed in part.
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2018 (9) TMI 921
Classification of Services - appellant own two Aircrafts/Helicopters, which are being provided by them on chartered hire basis - whether in the given facts and circumstances of the case, the services provided by the appellant are the Aircraft Operator Service as assumed by the appellant or, are the services for supply of tangible goods for use as alleged by the Department? Held that:- For an Aircraft operator service , the activity is regulated under strict observation of Aviation Industry subject to stringent regulatory controls, Director General of Civil Aviation grants permits to the scheduled aircraft transport service. Even a non-scheduled permit can be granted by DGCA and the fact remains is that any person in Aviation has at least to be a non-scheduled operator. As far as supply of tangible goods is concerned, it is apparent from the above definition that it is the transfer of the goods to be used without the transfer of its legal possession and effective control by one person to another - The invoice makes it clear that the Aircraft was given on hire for use of charterer on the terms and conditions of the permit in favour of the appellant. It is evident that the Aircraft was supplied alongwith the licensed / trained Pilot and necessary Engineering Crew to operate the Aircraft. Thus, the effective control and possession of the Aircraft was still with the appellant, who was charging the charterer on the basis of actual time consumed during the said flight. An identical issue regarding charter hire of helicopter came up before the Tribunal in the case of Global Vectra Helicorp Ltd. vs. CC (Import) Mumbai [2015 (2) TMI 974 - CESTAT MUMBAI (LB)], in that case the appellant therein claimed the classification of their service as Transportation of Passengers by Air Service. But, the Tribunal after very detailed discussion of the facts and various case laws on the subject as well as CBEC Circular No. 20/2009 dt. 09.02.2009 came to the conclusion that the services will be rightly classifiable under the category of Supply to Tangible Goods Service - the classification of the service under the category of STGS upheld. Time Limitation - Held that:- It is apparent from the show cause notice dated 21.12.2010 that a demand for the period w.e.f. May, 2008 to May, 2010 has been raised - It becomes apparently clear that while issuing the said show cause notice, Department has invoked the longer time limit as mentioned in proviso to Section 73 of the Act. The law for invoking extended period of limitation is stated that the onus heavily rest upon the Department to prove the alleged suppression of facts. Perusal of entire record shows no such discharge on part of the Department, except merely raising the oral allegation of suppression - the Department was not entitled to invoke the extended period of limitation - the demand falling beyond one year period preceding show cause notice dated 21.12.2010 is not sustainable and accordingly is set aside. Demand beyond normal period do not sustain - Appeal allowed in part.
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2018 (9) TMI 920
Construction and Residential Complex Services - Demand alongwith Interest and penalties - time limitation - work for Noida Authority for development of Housing Pockets by providing and laying water lines, providing and laying sewer lines, construction of internal roads, construction of internal drains & culverts, development of parks, providing of water, sewer & electric connections etc. and construction of 544 HIG Houses Held that:- Tribunal in the case of Commissioner of Customs, Central Excise & Service Tax, Allahabad vs. Ganesh Yadav [2017 (5) TMI 1251 - CESTAT ALLAHABAD] has held that the flats constructed under “Works Contract” for the welfare of weaker section of the society cannot be held to be intended for commerce or industry. Time Limitation - Held that:- All the facts were in the knowledge of the Revenue and no mala fide can be attributed to the appellant - extended period cannot be invoked. Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 919
Refund of accumulated Cenvat credit - refund rejected on the ground that the appellant failed to submit documentary evidence for export of services in the form of ‘Softex Forms’ - Rule 5 of Cenvat Credit Rules - Held that:- The refund under Rule 5 of the Cenvat Credit Rules, 2004 may be granted by the departmental authorities subject to fulfillment of the conditions and safeguards prescribed in the Notification No. 27/2012-CE (NT). The conditions and safeguards have been prescribed to ensure that the services have been duly exported and payment for the same has been received in foreign exchange. Documentary evidences as prescribed under notification are required to be submitted to satisfy the requirements. The Tribunal in the case of Mobile Iron India Software Pvt. Ltd. Vs. CCE, Hyderabad [2017 (4) TMI 228 - CESTAT HYDERABAD], has concluded that the insistence to furnish Softex returns from STP authorities is not as per the law laid down in the relevant field - In the present case also, the appellant has claimed to have exported Information Technology Software Service. The fact of export of such software and the receipt of the foreign exchange therefore is sufficiently evidenced from the invoices, the FIRCs and the Chartered Accountant’s certificate certifying the total turnover. Refund allowed - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 918
CENVAT Credit - availability of credit to the main contractor who had sub-contracted the job - quantification of the value for which the input credit - Held that:- CBEC Circular No. 96/7/2007-S.T. allows this kind of credit under Cenvat Credit Rules if the work is subcontracted by the main contractor - the Order is required to be set aside and matter remanded to the Adjudicating Authority for denovo consideration - appeal allowed by way of remand.
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2018 (9) TMI 917
Refund of Service tax paid wrongly - refund rejected on the ground that appellant/assessee being a sub-contractor of M/s NBCC Ltd., they are the provider of construction service to M/s NBCC and not to the Government of India and thus they have rightly paid service tax on the service provided by them to M/s NBCC which is not a part of Government of India and therefore exemption as provided under Circular No. 80/2004-ST dated 17/09/2004 is not available to them. Held that:- The sub-contractor providing service to NBCC who is the main contractor for construction of the residential complex for the Government of India will also be entitled for exemption category which is given in the definition of the residential complex itself - Since the activity itself of construction of the houses for personal use is beyond the taxable category even if this activity is undertaken by any sub-contractor the category for the levy of service tax will not change and the sub-contractor will also be entitled for exemption which is given in the definition itself. Refund allowed - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 916
Liability of Service tax - amount calculated of the share of the land owners in the developed property - case of the appellants before the lower authorities that the value of the services rendered to the land owners is already built on the amounts charged by them to independent flat owners - Held that:- Identical issue decided in the case of VASANTHA GREEN PROJECTS VERSUS CCT, RANGAREDDY GST [2018 (5) TMI 889 - CESTAT HYDERABAD], where it was held that the amount attributable to the consideration received by appellant in the form of land rights from the land owner stands included in the value of villas sold to prospective customer which would mean that whatever consideration was received by the appellant in form of developmental right was considered in assessable value. Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 915
Refund of Unutilized Input Service - Export of Services - Rule 5 of CENVAT Credit Rules, 2004 - Refund rejected on the ground of limitation - Held that:- The issue as to how the period of limitation has to be computed in the case of export of service has been settled by the decision in the case of mPortal India Wireless Solutions Pvt. Ltd. [2011 (9) TMI 450 - KARNATAKA HIGH COURT], wherein it is held that date of FIRCs has to be taken as the relevant date for computing the period of one year for filing the refund claim - rejection of refund claim on the ground of limitation is unjustified - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 914
CHA - Liability of Service Tax - Documentation charges, Shipping Bill charges, Miscellaneous Income, Handling Fee etc., received by the appellants - Board’s Circular No. 119/12/2009-ST dated 21.12.2009 - Held that:- The Circular has clarified that The custom house agents, may be advised to show the service charges as 15% of the such lump sum amount of the bills. Service tax of 5% will be chargeable on the above 15%. Matter remanded back to the adjudicating authority for denovo consideration, based on the guidelines conveyed in the said circular - appeal allowed by way of remand.
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2018 (9) TMI 913
Liability of Service tax - Commercial and Industrial Construction Service - Business Auxiliary Service - Man Power Recruitment and Supply Agency Service etc - It appeared to the department that the appellant had not taken out service tax registration on such services in time and had not paid appropriate service tax on the taxable value of service rendered by him, on the presumption that services rendered by him would not attract service tax. Commercial & Industrial Construction Service - Held that:- For the period from 10.09.2004 to 30.04.2006, in view of the law laid down by the Hon’ble Apex Court in the judgment on L & T Ltd. [2015 (8) TMI 749 - SUPREME COURT], there cannot be any service tax liability on this activity - demand set aside. Demand raised under BAS for the period 16.06.2005 to 30.09.2006 - Held that:- If job work done is not amounting to manufacture, then service tax is leviable on such job-work activities - the original authority in para-21 of the adjudication order has clearly brought out that the work carried out by the appellant are welding, framing and turning works on metal products which do not amount to manufacture and hence such services are correctly classifiable under BAS and liable for payment of service tax - demand upheld. Penalties - Held that:- More than half of the confirmed demand amounting to ₹ 1,64,607/- under CICS has been found as unsustainable - Further, even in respect of taxability on job work, there was indeed some confusion in the matter especially and whether process itself amounted to manufacture was in dispute - penalties unjustified. Appeal allowed in part.
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2018 (9) TMI 912
Man Power Recruitment or Supply Service - service tax collected but not paid within prescribed dates - demand alongwith Interest and Penalties - Held that:- The appellants discharged the tax liability, though belatedly, along with interest thereon - the reasons of bad financial health put forth by the Ld. Consultant can be considered as the reasonable cause for their failure to discharge the tax liability in time. Penalties u/s 76 and 77 set aside by invoking section 80 - the late fee of ₹ 2000/- imposed under Rule 7C of the Service Tax Rules, 1994 for belated filing of the ST3 Returns upheld - demand of Service tax also upheld - appeal allowed in part.
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2018 (9) TMI 911
Erection and commissioning of electrical towers - GTA Services - demand alongwith Interest and penalty - N/N. 45/2010 dt. 20.07.2010 - Held that:- In a number of cases involving identical disputes, the Tribunal has consistently reiterated that all taxable services relating to assessment and distribution of electricity upto the periods indicated in the said notification will not be taxable - reliance placed in the case of M/S HYDERABAD POWER INSTALLATIONS PVT. LTD. VERSUS CCE, C& ST, HYDERABAD-II [2016 (7) TMI 1151 - CESTAT HYDERABAD] - Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 910
Penalty - GTA service - it appeared to the department that the assessee have not paid service tax on the whole value of the freight amount paid to the transporters; that they have determined the service tax payable on cum-tax method - Held that:- The issue of taxability with regard to GTA service had undergone number of changes in the initial years and there was understandable confusion on various aspects. Hence, we are of the considered view that the penalties imposed are unwarranted - Penalties set aside without disturbing the tax demand and interest thereon - appeal allowed in part.
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Central Excise
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2018 (9) TMI 909
CENVAT credit - capital goods - steel items namely M.S. Angles, Beams, M.S Channels, Bars, Plates, Shapes and Sections used in the manufacture of Parts of Plant and Machinery which were either permanently embedded to the earth or were for providing access to various machines - Held that:- The items of iron and steel were used in the capital goods which had been put to captive uses in the factory for the manufacture for final product - Under Rule 2(k) of the credit rules, inputs in the case of goods used in the factory of manufacture of final products, these goods were used towards the manufacture of capital goods used in the factory for final product captively which are exempted by way of Notifacation No. 67/95-CE dated 16.03.95. This issue is no more res integra and is covered in favour of the assessee in the case of Ritesh Trade Fin Ltd. Vs. Commissioner of Central Excise, Bolpur [], where it was held that Plea that capital goods were not excisable goods as they were attached to earth to be irrelevant. Credit allowed - appeal dismissed - decided against Revenue.
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2018 (9) TMI 908
Refund claim - destruction of rejected inputs and expired manufactured goods - rejection of refund on the ground that destruction was not carried out in the presence of Central Excise officer and that the prior permission for taking out of the goods of the appellants units was not taken before the destruction - Held that:- Admittedly the noticee is a 100% Export Oriented Unit (EOU). Resultantly, a Notification No. 23/2003 dated 31.03.2003 as is stands amended vide Notification No. 30/2015 dated 25.05.2015 are applicable upon the appellant. As per this Notification, the duty shall not be leviable in case the capital goods or reject, waste or scrap material are to be destroyed. As per 2003 Notification, presence of Central Excise Officer was a mandate at the time of such destruction. However, after the amendment in the Notification, if the said destruction is within the unit, the intimation thereof is required to be given to the Customs Authorities and if it is outside the unit, a permission of Customs Authorities is required. The fact still is abundantly clear that the duty shall not be leviable on the impugned goods, appellant being an EOU. It is also apparent from the Show Cause Notice itself is that the appellant has destroyed not only the final and expired goods but the raw materials as well, after taking those out from their premises but to the premises of Madhya Pradesh Waste Management Project. It is observed that while such removal, the appellant has already paid the duty on the stuff removed - It is also apparent from record that while removing the products from appellant s unit, intimation was given by the appellant to the Customs Authorities. The prior permission or presence of the Custom Officer retains no further significance. Resultantly, the lapse on part of the appellant was not at all substantive in nature. It was merely procedural lapse. It is a substantive benefit of the appellant and as such cannot be denied on a mere procedural lapse on his part that too when it occurred due to no knowledge of the impugned Notification. Refund is to be allowed - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 907
CENVAT Credit - case of appellant is that the impugned order is contrary to the binding judicial precedent and the same is non-speaking and also in violation of the principles of nature justice being passed without considering the submissions made by the appellants - Held that:- There is no lapse and violation of any CENVAT Credit Rules in purchasing the material from the registered dealer as the appellants have maintained statutory records and the payments have been made to the suppliers through banking channels and the appellants have paid the duty on the final product which has not been disputed by the department. The cases of the appellants are squarely covered by the decision of the Division Bench of this Tribunal in the case of Shri VK Bhuraria and others [2018 (5) TMI 818 - CESTAT NEW DELHI], where it was held that Department has made out a case of irregular availment of cenvat credit mainly based on the statement of Shri Amit Gupta and transporters, but no cross examination of the witnesses was provided to the appellants. One of the witnesses has retracted his earlier statement. Surprisingly, in the instant case, no inquiry was made from the customers of the appellant company, credit remains allowed. Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 906
CENVAT credit - duty paying invoices issued by the Coal Companies - supplementary invoices - Rule 9 (1) (b) of Cenvat Credit Rules - suppression of facts or not? - Held that:- It has been specifically noted that the connected matters of South Eastern Coal Field Ltd. are pending adjudication before the Hon ble Apex Court - Issue being already sub-judiced the element of confusion cannot be ruled out. Suppression being altogether contradictory to Confusion , the same cannot be made applicable in the given circumstances, unless and until there is some apparent positive act of the appellant on the record amounting suppression of fact. It is apparent on record that the show cause notice to M/s. SECL is prior event than the appellant availing the credit on supplementary invoices issued by the said M/s. SECL but the simultaneous fact remains is that the demand against M/s. SECL vide said show cause notice is still under challenge and is pending adjudication before the Hon ble Apex Court. It is clear to hold that the issue of wrong availment on part of M/s SECL is still a debatable issue - the ascertainment on part of the appellant as is required under Rule 9 (1) (b) of Cenvat Credit Rules cannot be held to have been an act of suppression. Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 905
CENVAT credit - Input service distributor - Club Membership Fees - exclusion clause in Rule 2 (l) (ii) (C) of the Cenvat Credit Rules - whether the appellant is entitled to the Cenvat Credit to Service Tax paid on the membership fees paid to various association? Held that:- The exclusion clause (C) has excluded certain types of services but these have been qualified with the wordings, “when such services are used primarily for personal use or consumption of any employee” - Keeping in view the fact that the appellant is engaged in the manufacture and sale of cement, it is reasonable to conclude that such services have been used for accomplishing their business activities. It cannot be said that such services are for the personal use of any employee. Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 904
CENVAT Credit - inputs - halogen bulbs with the brand name OSRAM - denial on account of nexus - Held that:- The appellant is engaged in the manufacture of Automobile head lamps. One of the inputs required for such manufacture of head lamps is the halogen bulbs. Accordingly there is no doubt that the halogen bulbs are eligible to be considered as inputs and the cenvat credit on such goods will be available in terms of the definition of inputs in Rule 2 (k) of the Cenvat Credit Rules, 2004 - credit allowed. Clearance of inputs as such - reversal of credit - Held that:- For the clearance of such inputs outside the factory as such without use in the manufacture, invoices have been used and the cenvat credit availed on inputs stands reversed at the time of such clearance - The appellant having debited the cenvat credit availed on the inputs, Revenue is not justified in asking for repayment of such cenvat credit alongwith interest and penalties. Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 903
CENVAT Credit - Common inputs/input services used in manufacture of taxable goods as well as in trading activity - whether the supplies made by the appellant of various materials as indicated in paragraph No. 2 on a separate commercial invoices has to be considered as trading activity or otherwise? Held that:- The appellant has in pursuance of such a contract had procured the said items from the market and used them in executing works contract which included the supply operation also to the extent of manufacturing by appellant as well as procurement from the open market - It is now settled law in the case of CCE & C Kerala Vs L&T Ltd [2015 (8) TMI 749 - SUPREME COURT] by the Apex Court that the works contract remains works contract and cannot be vivisected for taxing various activities under different services. Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 902
Penalty - SSI Exemption - use of Brand Name of others - only allegation against the appellant is that they dealt with the goods on which duty was not discharged - Held that:- The penalties imposed under Rule 26 are excessive and requires interference - the penalties imposed on M/s. Raj Ganesh Enterprises is reduced from ₹ 5,00,000/- to ₹ 1,50,000/-; M/s. Sowbaghya Enterprises Pvt. Ltd. is reduced from ₹ 5,00,000/- to ₹ 1,50,000/- and M/s. Sowbaghya Enterprises Pvt. Ltd. is reduced from ₹ 1,00,000/- to ₹ 50,000/- - Appeal allowed in part.
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2018 (9) TMI 901
CENVAT credit - input services - freight charges for outward transportation of goods up to the customer’s premises - Held that:- The said issue as to whether the appellant is eligible for credit when the outward transportation is on F.O.R. basis up to the buyer’s premises, has been settled by the decision of the Hon’ble Apex Court in the case of M/s. Ultra Tech Cement Ltd. [2018 (2) TMI 117 - SUPREME COURT OF INDIA], where it was held that Cenvat Credit on goods transport agency service availed for transport of goods from place of removal to buyer’s premises was not admissible to the respondent. In the present case, the period involved being after after 01.04.2008, the credit is not eligible - appeal dismissed - decided against appellant.
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2018 (9) TMI 900
Demand of Interest - CENVAT credit, availed wrongly, was reversed before utilization - Held that:- The appellant had reversed the credit before utilization - the demand of interest and the findings with regard to penalty cannot sustain - reliance placed in the case of Commissioner of Central Excise, Madurai Vs. Strategic Engineering [2014 (11) TMI 89 - MADRAS HIGH COURT] - Demand of Interest do not sustain - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 899
Demand of Interest and penalties - CENVAT Credit on Construction Services for the period from October, 2011 to July, 2012 - Department was of the view that the said credit is not eligible as per the amended definition of input services with effect from 01.04.2011 - whether the appellants are liable to pay the interest and the penalties imposed on the ground that they had availed credit on Construction Services after 01.04.2011? Held that:- It is not disputed that the appellants had reversed the credit immediately on being pointed out - In the case of Strategic Engineering (P) Ltd. [2014 (11) TMI 89 - MADRAS HIGH COURT], the Hon’ble jurisdictional High Court has held that no interest and penalty can be levied when the wrongly availed credit has been reversed before utilization. Demand of interest and penalties set aside - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 898
CENVAT credit - input services - Manpower Supply Services which were used for housekeeping, canteen and also for cleaning of toilets - Held that:- These services are integrally connected to the manufacturing activity and very much essential to keep the factory premises, office of factory, etc., in a clean and hygienic manner - denial of credit on such services is unjustified and requires to be set aside - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 897
Wrongful availment of CENVAT credit, reversed later demand alongwith Interest and Penalty - Demand is raised alleging that the appellant has availed credit wrongly on common inputs for exempted as well as dutiable products - Held that:- In the case of C.C.E. Chennai-II Vs. Mount Mettur Pharmaceuticals Ltd. [2017 (9) TMI 1375 - MADRAS HIGH COURT], the Hon’ble jurisdictional High Court has considered a similar issue and observed that when the credit has been reversed along with interest, there is no liability to pay up 10%, as demanded by the Department - demand cannot sustain - appeal dismissed - decided against Revenue.
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2018 (9) TMI 896
Reversal of CENVAT Credit - inputs written off - Rule 3 (5B) of Cenvat Credit Rules, 2004 - Revenue contends that appellant should produce all the documents reflecting proper reversal to the satisfaction of the adjudicating authority - Held that:- Interest of justice requires a remand of the matter. Accordingly, the case is remanded to the original authority to pass fresh adjudication order after affording reasonable opportunity to the appellant - appeal allowed by way of remand.
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2018 (9) TMI 895
CENVAT credit - input service - ‘Rent-a-Cab’ services for the staff/employees working in the office/factory - Held that:- Tribunal in the case of Capsugel healthcare Ltd. [2016 (2) TMI 977 - CESTAT CHANDIGARH] has held that Rent-a-Cab services availed by the assessee for the employees bringing them from their residence to factory or vice versa, qualifies as input services - Prior to 01.04.2011, Rent-a-Cab services are eligible input services and Cenvat credit cannot be denied on these input services. Credit allowed - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 894
CENVAT credit - input service - renting car for use by their employees in connection with manufacturing activities - denial on account of nexus - Held that:- An identical issue is decided in the appellant’s own case by this Bench in M/S. SUNDRAM FASTENERS LIMITED VERSUS CCE, PUDUCHERRY [2017 (2) TMI 16 - CESTAT CHENNAI], where it was held that there is no evidence to substantiate the claim that the service so availed was in relation to manufacture, and credit cannot be allowed - Cenvat credit of service tax paid on Rent-a-Cab service is not allowable - no penalty imposable - appeal allowed in part.
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2018 (9) TMI 893
CENVAT credit - input services - Housekeeping services - Held that:- The appellants have availed the impugned services to keep the factory premises clean as well as to keep the office clean and in hygienic manner. The Factories Act, 1948 mandates that the factory premises has to be maintained sufficient degree of cleanliness, maintenance etc. Hence, housekeeping services are indispensable for the manufacture of final products - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 892
Classification of goods - coated fusible interlining fabrics of cotton - Appellants had originally classified the impugned fabrics under Central Excise Tariff Heading (CETH) 5903 consequent to insertion of Note 2(c) in Chapter 59 of the Central Excise Tariff Act, 1985 (CETA) w.e.f. 01.03.1989. The said chapter note was omitted w.e.f. 16.03.1995, subsequent to which appellants sought reclassification of the impugned fabrics under CETH 5207. Whether the goods classified under Chapter 5903 as coated fabrics or in Chapter 52, based on the base textile material contained therein? Held that:- There was no lack of clarity in the de-novo directions at the stage of adjudication. We are then unable to fathom how both the de novo adjudicating authority as well as the lower appellate authority have not bothered to re-examine the matter through the lens of Circular No.5/89 as per the specific direction given to them. On the contrary, these authorities appear to have reiterated the CBEC guidelines contained in CBEC Circular No.433/66/98-CX dt. 27.11.98 which had expounded that omission of Chapter Note 2(c) was neither intended to, nor resulted in, changing the classification of Fusible Interlining Cloth under CETH 5903; that classification of such fabrics may be considered as an exception under Chapter No.2(a) (iv) of Chapter 59 according to which fabrics partially coated or partially covered with plastics and bearing designs resulting from those treatments are excluded from the scope of CETA 5903. The retest reports clearly indicate that the samples of the impugned fabric have characteristics which would fall within the exclusions (i) to (v) of Chapter Note 2 (a) to CETH 59.03. So also, the requirement of “impervious” for the purpose of Board’s telex circular 30.9.88 and Circular No.5/89 dt. 15.6.89 will not then be satisfied. Hence, even based on the output of the retest conducted by the CRCL, New Delhi as per Tribunal’s direction it is clear that the impugned fabric will fall outside the scope of classifiability under CETA 5903. When Chapter Note 2 (c) itself is no longer in existence, and the impugned goods otherwise did not satisfy the requirements laid down in Chapter Note 2(a) read with CBEC circulars (supra), impugned goods will not get classified under CETH 59.03. Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 891
Benefit of N/N. 4/2006-CE dated 01.03.2006 - contention of the Ld. Consultant that exemption referred to by the Revenue ie., Sl.No. 90 of the Notification No. 4/2006-CE dated 01.03.2006 as amended is subject to satisfaction of condition No.10 and therefore, is not an absolute Exemption Notification rather a conditional Exemption Notification - Held that:- A bare reading of Sl.No. 90 of the Notification, it is found that the same is controlled by the condition No. 10. While the rate of duty on the goods described at Sl.No. 90 are ‘nil’ ie., exempted, the goods at Sl.No. 91 are taxed at 4%; Sl.No. 90 is controlled by condition No. 10 whereas Sl.No. 91 is controlled by condition No. 11. The first condition is that the exemption is available for the clearance of first 3500 MTs and the second condition is that the exemption is not applicable to a manufacturer who avails exemption under Notification No. 8/2003-CE dated 01.03.2003. The ‘nil’ rate of tax is therefore available subject to the satisfaction of both the above conditions - appeal allowed. Principles of natural justice - Department is aggrieved by the orders of the Commissioner to the extent that there was no findings with regard to the proposition made in the SCN to the demand of Cenvat credit of the balance amount of ₹ 28,27,645/- and ₹ 17,81,500/- Which was lapsed on 31.03.2010 - other grievance of the Revenue is that there is no finding given by the Commissioner for invoking Section 11 AC of the CEA - Held that:- The Ld. Commissioner has clearly observed that the assesse has to necessarily pay an amount equivalent to the credit availed on inputs, inputs in the process of manufacture and inputs in the final products lying in stock either by deducting the amount from the balance available in their books of accounts and, if there is no sufficient balance, then, by way of cash payment. With regard to the balance credit available in the appellant’s books after such reversing as on 31.03.2010, if any, is lapsed. The above finding is clearly on the demand of Cenvat credit on the balance of ₹ 28,27,645/- and ₹ 17,81,500/-as on 31.03.2010 - there is no valid reason in this ground of the departmental appeal - appeal of Revenue dismissed. Penalty under Rule 15 of CCR read with Section 11 AC of the CEA - Held that:- The assesses appeals is allowed by setting aside the demand with consequential reliefs and therefore, the very levy of penalty is set aside. Appeal allowed - decided in favor of assessee.
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CST, VAT & Sales Tax
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2018 (9) TMI 890
Failure to furnish revised returns within specified time - Section 28 of DVAT Act - inability in Obtaining of F-Forms - Section 33 read with Section 86(9)(c) of the DVAT Act - Genuine transactions - inter-state inward branch transfers - Held that:- Section 86(9)(c) facially suggests that if some particulars which should have been disclosed in the return are not disclosed, the tax payer is liable by way of penalty `200 per day from the date falling the due date until the failure is rectified - Undoubtedly, while F-Forms relate to the stock available with the dealer, which the petitioner does not dispute was in its knowledge, nevertheless in argument, it is not disputed that the transactions claimed for which examination is sought are not genuine. No doubt, the petitioner might have been aware but its case is that the incorrect particulars were reflected in the final return files. The respondent is directed to issue the concerned F-Forms pertaining to the transactions undertaken by the petitioner in the concerned quarter of Financial Year 2012-13 within four weeks from today - petition allowed.
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2018 (9) TMI 889
Maintainability of petition - alternative remedy of appeal available - Revision of assessment - assessment years 2011- 12, 2012-13, 2013-14 & 2014-15 - case of petitioner is that the impugned order is non-speaking and the authorities, who passed the orders had not applied his mind in respect of the objections raised by the writ petitioner - Held that:- This court is of an opinion that against the revision order passed under Section 27 of the Tamil Nadu Value Added Tax, 2006, there is an appeal under Section 51 of the said Act. The writ petitioner has to exhaust the appeal remedy provided under the provisions of “the TNVAT Act”. This Court is of a strong opinion that institutional respects are to be maintained by the constitutional Courts also. Whenever there is a provision of appeal under the statute, without exhausting the remedies available under the statute, no writ petition can be entertained in a routine manner. Only on exceptional circumstances, the remedy of appeal can be waived, if there is a gross injustice or if there is a violation of fundamental rights ensured under the Constitution of India. The writ petitioner is at liberty to submit an appeal before the Appellate Authority under the provisions of “the TNVAT Act” and in the event of submitting an appeal, the Appellate Authority has to adjudicate the same on merits and in accordance with law - petition dismissed.
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2018 (9) TMI 888
Recovery of tax and penalty - Assessment years 2007-09 to 2010-11 - TNVAT Act - Held that:- Though such a stand has been taken by the Commissioner, unfortunately his officers have not understood the matter in the manner now projected by the Commissioner. The second respondent/ Assessing officer understood the order as a clarification or in other words as a positive direction. However, the Assessing Officer taking note of the fact that the issue is sub-judice, had addressed the Deputy Commissioner seeking clarification vide his letter dated 21.03.2018 in which he specifically asked for guidance whether to cancel all the proceedings levying penalty at higher rate and treating the goods sold by the petitioner as unbranded goods - the stand taken by the Commissioner in the additional Counter affidavit is rejected as an afterthought as the Department has understood the order dated 26.10.2016 as a positive direction for implementation. Part of the prayer sought for by the petitioner has been granted by the Department inasmuch as revised Assessment orders have been passed on 07.06.2018. Consequently, the impugned demand cannot survive any longer. This is not on account of any interpretation of the statute or applying a legal principle, but solely attributable to the orders passed by the Commissioner in favour of the assessee Petition allowed in part.
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2018 (9) TMI 887
Jurisdiction - Power to direct VAT Audit - case of petitioner is that the authorization can be granted only by the Commissioner - Held that:- It will be useful to refer to the order passed in M/s.Empress Audio [2018 (6) TMI 1239 - MADRAS HIGH COURT] and the reasons as to why the Court rejected the contention raised by the petitioner therein, which is identical to that of the contention raised by the petitioner before this Court - It was held in the case that what is required under Section 64(4) is an order of the Commissioner and if there is an order to the said effect, then authorisation of lower level officers, by officers subordinate to the Commissioner, cannot be termed as ordering an audit, but it is a proceedings by which the order passed by the Commissioner, is implemented or carried forward. This submission cannot be considered at this stage in this writ petition, wherein the challenge is to the VAT Audit report and it is well open to the petitioner to raise such contention before the assessing officer, as and when show cause notice is issued - Petition is dismissed.
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Indian Laws
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2018 (9) TMI 930
Constitution of an arbitral tribunal - Appointment of Sole Arbitrator - adjudication of claims of the petitioner under the Commission Processing Contract dated 11.09.2014 - Held that:- Clause 15 refers to arbitration or court. Thus, there is an option and the petitioner has invoked the arbitration clause and, therefore, we have no hesitation, in the obtaining factual matrix of the case, for appointment of an arbitrator and, accordingly, Justice Prakash Prabhakar Naolekar, formerly a Judge of this Court, is appointed as sole Arbitrator to arbitrate upon the disputes which have arisen between the parties. The arbitration petition is allowed.
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2018 (9) TMI 929
Dishonour of cheque - Theft or misappropriation of the cheques - concept of vicarious liability - Does the complaint not maintainable for its omission to array the Proprietary concern Sudha Gas Agency as accused? - plea is liable to be rejected outright for the simple reason that Section 141 of N.I. Act contemplates procedure in case of offence committed by company - Held that:- Company is a legal entity by itself. Being a juristic body it can sue or be sued. Though company being a juristic body and can sue and be sued, it cannot operate itself. Some human agency is required. Therefore company being the principal, the human agency who operates the company become its agent. So, the natural person either individual or group of individuals who operates on behalf of the company is vicariously held liable for the act he do for or on behalf of the company. Hence Section 141 of the N.I. Act, say, besides company, whom else to be prosecuted when the company is the offender. Whereas Proprietorship concern is not a juristic body. It cannot sue or be sued - there cannot be any vicarious liability unless there is prosecution against the company. The said dictum does not cover proprietary concern. Does mere denial of facts regarding transaction, sufficient to hold the accused has rebutted the statutory presumption under Section 139 of N.I. Act? - Held that:- When the complainant has proved the agreement Ex.P.2 through attesting witnesses and the claim of alibi not proved by the accused, the lower appellate Court has erroneously held that Ex.P.2 is titled as Agreement, it is not written in stamp papers, the agreement required stamp duty, so Without getting stamp duty penalty, the trial Court has wrongly admitted the same in evidence and marked as exhibit - It is very unfortunate that the lower appellate Court has failed to appreciate the document Ex.P.2 in proper perspective. It is always the content of the document decides the nature of the document, but not the title it carries. Ex.P.2 is recording of the compromise of the panchayat held on 12.07.2002. It is not relied to enforce the content of the document, which disclosed existence of a liability. For collateral purpose to show the cheques in dispute were issued pursuant to the panchayat, it is marked. The accused in this case, has attempted to probabilise there was no passing of consideration to issue cheques and the cheques were stolen by the accused while he was employed as Manager. From the evidence let in by the complainant as pointed out earlier, the complainant has established to the core that he was not mere a Manager in Sudha Gas Agency, he and his family members have contributed to the business and the same has been acknowledged by the accused himself in his letters to HPCL just few months before the trouble started - Mere denial of liability or passing of consideration will not be sufficient to rebut the presumption under section 139 of the N.I. Act. Such a rebuttal should be backed by some material evidence which could probabilise the facts content in it. The points framed for consideration answered accordingly. The Trial Court is directed to secure the respondent/accused and commit him to prison to undergo the period of sentence - appeal allowed.
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2018 (9) TMI 928
Validity of Settlement Agreement - whether the Agreement is binding on parties - case of plaintiff is that since the settlement was not recorded, no payment is liable to be made - Held that:- The Defendants have not only enjoyed the entire sum which was to be paid to the Plaintiff since 2014, but even as of 2018, when submissions were heard in the matter, the Defendants were not willing to make the payment. Repeatedly, the matter was adjourned on various occasions including on 16th July, 2018, 18th July, 2018 and 24th July, 2018 and finally on 9th August, 2018 the submissions were heard and the judgment was reserved. On all these occasions, learned counsel for the Defendants had taken the stand, that if the settlement is recorded now, the payments would be as per the instalments in the Settlement Agreement and even now the Defendants are not willing to make the entire payment at one go. The Defendants categorically asserted before the Court that no interest is liable to be paid by them. A perusal of the escrow agreements also shows that the same have been only signed by the Defendants and not by the Plaintiff. In any event, these escrow agreements were prior to the Settlement Agreement, which supersedes the escrow agreements. This Court has no option but to decree the suit along with a higher rate of interest - Suit is disposed off.
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2018 (9) TMI 927
Dishonor of cheque - existence of legally enforceable debt - Section 138 of Negotiable Instruments Act - Held that:- Taking into consideration the entirety of the facts and circumstances of the case, the trial Court came to the conclusion that the respondent herein has successfully demonstrated in the crossexamination of P.W.1 that there is no prior legally enforceable debt as alleged by the complainant - the lower appellate Court has correctly came to the conclusion that there is no pre existing legally enforceable debt and set aside the conviction laid by the trial Court and acquitted the respondent is well founded on the facts and circumstances and evidence on record. Appeal dismissed.
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2018 (9) TMI 926
Maintainability of petition - Petition filed by power of attorney - Dishonor of Cheque - Section 138 of Negotiable Instruments Act - suggestive case of the respondent/accused is that the petition filed by the power of attorney is not maintainable - Held that:- In the power of attorney given by the private complainant in Ex.P1, it was given only in respect of M/s.Swastik Yarn Enterprises Limited and to take action another Company Limited wherein the name of M/s.S.R.Sarala & Company was inserted by way of ink and the said fact was admitted by the P.W.1 and thus in the absence of non-examination any of the Directors as to whether the power of attorney agent was given to the present power agent (P.W.1) under Exhibit P1 also covers the respondent case or not cannot be inferred and hence, the trial Court has rightly commented upon the said insertion and corrections held that the power deed is not maintainable, in view of the defects in the power deed. The nonproduction of the alleged document with regard to the alleged transaction, the trial Court is quite right in drawing adverse interference against the appellant and the same cannot be found fault with and thus on entirety of the circumstances, the suggestive case of the defendants as reflected under Ex.R1 issued as early as on 10.02.2013, immediately after the legal notice under Ex.P5, dated 4.2.2003 and non-production of documents relating to the alleged business transaction, non-production of documents receipts and invoices regarding alleged transaction coupled with a fact that Ex.P1 Power Deed is found to be defective, consequently make the appellant case more improbable and unbelievable. On the date of the issuance of stop payment by the respondent/accused is having a amount to the tune of more than one crore, the trial Court quite right holding that respondent has sufficient funds in his account and thereby order of acquittal of the respondent herein and the said finding does not call for any interference - appeal dismissed.
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2018 (9) TMI 925
Whether the Petitioner in C. R. P. (MD). No. 2332 of 2008 is entitled for the relief sought for and whether the action of the Respondent bank is sustainable in Law? - whether the Petitioner in C. R. P. (MD). No. 535 of 2017 can get the plaint in O. S. No. 797 of 2014 rejected at this stage? Held that:- The bank had not taken any earnest step to settle the dispute by receiving the debt amount especially when the debtor had come forward to deposit the decreetal amount. The bank has even now not furnished any particulars pertaining to the alleged sale said to have been conducted by it. The bank has not filed any documents for this Court to at least have a glance to satisfy itself as to whether the bank followed at least rudimentary principles of auction sale. This shows that the bank is not willing to frankly disclose the facts and it reflects upon the illegal way in which the bank had tried to bring the borrowers property for sale instead of trying to realize the debt. The alleged auction purchasers as stated above have also not taken any earnest steps in spite of the knowledge of the pendency of the Civil Revision Petition. Furthermore the alleged auction purchasers, who are litigation purchasers, may not be entitled to any equity especially as the borrower has taken earnest steps to deposit the decreetal amount. The alleged auction purchaser can be treated only at par with an Pendent lite Purchaser and the alleged sale in favour of the auction purchaser during the pendency of the suit in O. S. No. 33 of 2004 will not confer any right in favour of the alleged auction purchaser beyond the outcome of the suit. In view of the mater it is not even necessary for hearing the said auction purchasers before granting relief to the Revision Petitioners in C. R. P. (NPD). (MD). No. 2332 of 2008. The principles of natural justice will not come into play in this case in view of the above findings and also in view of the exception to the above said rule on the ground of Doctrine of Empty Formality. When this Court finds that the very act of the Respondent bank in invoking SARFAESI proceedings during the pendency of the civil suit is illegal all further actions taken pursuant to such a proceeding will also be null and void and it will not confer any right upon the auction purchaser. This Court is of the view that the impugned order passed by the learned Principal District Judge, Dindigul in I. A. No. 83 of 2008 in O. S. No. 33 of 2004 dated 20. 11. 2008 is liable to be interfered with and accordingly, the same is set aside. The Petitioner in C. R. P. (NPD). (MD). No. 2332 of 2008 is directed to deposit the amount Decreed in O. S. No. 33 of 2004 as modified in A. S. (MD)No. 217 of 2009 after deducting ₹ 3, 00, 000/- (Rupees Three Lakhs) within a period of four weeks from the date of receipt of a copy of this order before the learned Principal District Judge, Dindigul to the credit of the Decree in O. S. No. 33 of 2004 dated 26. 03. 2008. Petition dismissed.
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