Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
September 29, 2018
Case Laws in this Newsletter:
Income Tax
Customs
Corporate Laws
Service Tax
Central Excise
Indian Laws
TMI SMS
Articles
News
Notifications
Circulars / Instructions / Orders
GST - States
- 45/2018 - dated
18-9-2018
Levy of GST on Priority Sector Lending Certificates (PSLC)
- 46/2018 - dated
18-9-2018
Modification of the procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances, as clarified in Trade Circular Nos. 08/2018 dated 16.04.2018 and 36/2018 dated 17.09.2018
- 24/2018 - dated
17-9-2018
Clarifications regarding levy of GST on accommodation services, betting and gambling in casinos, horse racing, admission to cinema, homestays, printing, legal services etc.
- 25/2018 - dated
17-9-2018
Clarification regarding applicability of GST on Polybutylene feedstock and Liquefied Petroleum Gas retained for the manufacture of Poly Iso Butylene and Propylene or Di-butyl para Cresol.
- 26/2018 - dated
17-9-2018
Clarification on supplies made to the Indian Railways classifiable under any chapter, other than Chapter 86.
- 27/2018 - dated
17-9-2018
Clarifications regarding GST in respect of certain services.
- 28/2018 - dated
17-9-2018
Clarifications regarding GST in respect of certain services.
- 29/2018 - dated
17-9-2018
Joint Venture ---taxable services provided by the members of the Joint Venture (JV) to the JV and vice versa and inter se between the members of the JV.
- 30/2018 - dated
17-9-2018
Clarification on issues related to Job Work.
- 31/2018 - dated
17-9-2018
Setting up of an IT Grievance Redressal Mechanism to address the grievances of taxpayers due to technical glitches on GST Portal.
- 32/2018 - dated
17-9-2018
Issue related to taxability of ‘tenancy rights’ under GST.
- 33/2018 - dated
17-9-2018
Clarifications on refund related issues
- 34/2018 - dated
17-9-2018
Clarifications of certain issues under GST like car servicing, keeping of books of accounts in case of auction of tea etc.
- 35/2018 - dated
17-9-2018
Clarifications of certain issues under GST related to SEZ and refund of unutilized ITC for job workers.
- 36/2018 - dated
17-9-2018
Modifications to the procedure for interception of conveyances for inspection of goods in movement, and detention, release and confiscation of such goods and conveyances, as clarified in Trade Circular No. 08/2018 dated 16.04.2018.
- 37/2018 - dated
17-9-2018
Applicability of GST on ambulance services provided to Government by private service providers under the National Health Mission (NHM).
- 38/2018 - dated
17-9-2018
Taxability of services provided by Industrial Training Institutes (ITI).
- 39/2018 - dated
17-9-2018
Clarification regarding removal of restriction of refund of accumulated ITC on fabrics.
- 40/2018 - dated
17-9-2018
Scope of Principal-agent relationship in the context of Schedule I of the WBGST Act.
- 41/2018 - dated
17-9-2018
Recovery of arrears of wrongly availed input tax credit under the existing law and inadmissible transitional credit.
- 42/2018 - dated
17-9-2018
Clarification on refund related issues.
- 43/2018 - dated
17-9-2018
Processing of refund applications filed by Canteen Stores Department (CSD).
- 44/2018 - dated
17-9-2018
E-way bill in case of storing of goods in godown of transporter
- Corrigendum to Trade Circular No. 17/2017-GST - dated
17-9-2018
Corrigendum to Trade Circular No. 17/2017-GST dated 21st December 2017
DGFT
- 41/2015-2020 - dated
27-9-2018
Amendments in the Appendix 3B of the Merchandise Exports from India Scheme (MEIS)
Highlights / Catch Notes
Income Tax
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Reopening of assessment - If the Assessing Officer is prevented from carrying out assessment, the serious question of such assessment getting time barred by the time the petitioner's litigation before the Civil Court achieves finality.
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Assessment in the hands of representative assessee - The ITAT made a clear mistake in believing that since it was held in an earlier proceeding that the income in question arose in India, a representative assessee could not be liable because it was only liable according to it in respect of the income which was deemed to have arisen in India
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Reopening of assessment u/s 147 - bogus purchases - to what exact income had escaped assessment may be open for argument, nevertheless, would not be a ground to quash the notice of reopening.
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Denial of deduction/exemption under section 54EC - advance received in specified assets before the date of transfer of asset - the Board have decided that if the assessee invests the earnest money or the advance received in specified assets before the date of transfer of asset, the amount so invested will qualify for exemption under section 54E
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TDS u/s 194A - interest on unsecured loan - Assessee has acted bona fide and there was no intention on its part to benefit the recipients of interest by way of not deducting tax from the interest so paid to these two parties.
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TDS u/s 194A - disallowance u/s 40(a)(ia) - interest paid on term deposits to the members by assessee Co-operative bank - The appellant Co-operative Bank was not under obligation to deduct the amount from the TDS, for the assessment years prior to 1/06/2015 i.e. from 2010-11 to 2013-14.
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Computing the Annual Letting Value - income from house property - Property remained vacant - Assessee in the present case had rightly determined the ‘annual value’ of the property at Nil by taking recourse to Sec. 23(1)(c) of the ‘Act’.
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Since the quantum of production and turnover has been accepted, the rejection of books of accounts in the peculiar facts and circumstances has been held to be inapplicable and we find no good reason available on record on the basis of which the said conclusion can be varied.
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Unexplained investment - if Revenue wanted to make additions on this count, it is the first year i.e. AY 2009-10 when declaration and disclosure was made for the first time for such shares, the additions could have been made by Revenue towards unexplained investment but not the year under consideration.
Customs
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Effective date of Notification enhancing the rate of Export Duty - the notification was offered for sale or sent to the department only on 27.6.2008. Therefore, the notification cannot be said to have come into effect from 13.6.2008.
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Misdeclaration of Export goods - MOP of Fertilizer grade attempted to be exported in the guise of “OWC (Drilling Chemical Additive)” - illegal export of the same, for personal gains by the appellant, at the cost of the farmers of the country and exchequer, become a serious offense punishable under the law.
DGFT
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Amendment of import policy of Petcoke - In addition to the existing four industries namely cement, lime kiln, calcium carbide and gasification industries, the fifth one i.e. graphite electrode industry is added for whom Petcoke is freely importable.
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Amendment in Para 2.47 of FTP 2015-2020 - Export through Courier Service/Post
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Amendment in the import policy of Peas under Chapter 7 of the ITC (HS 2017, Schedule -l (Import Policy)
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Amendments in the Appendix 3B of the Merchandise Exports from India Scheme (MEIS)
SEZ
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Special Economic Zones (Amendment) Rules, 2018 - SEZ Rules has been amended substantially
Service Tax
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Classification of services - outsourcing of their activity - Franchise service or not - The argument of the ld. counsel that it involves only transfer of intellectual property cannot be accepted for the reason that the agreement involves conditions wherein the manner of functioning and operation of the associate center is laid down.
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Reversal of CENVAT Credit - once it is concluded that the Financial Leasing Service is not an exempted service, there is no justification in considering the portion of the value of taxable service exempted vide N/N. 4/2006, dated 01.03.2006 to be included in the formula for determining the amount to be reversed.
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Outdoor Catering service - supply of food made in the hotel to the client premises - No personalized service is involved - If one person goes to the premises of the company to check whether the food is sufficient, it can be overseeing the activity of sale of food. But this cannot be considered as catering to the service of the customer.
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The amounts collected during the impugned period on a service which was not then a ‘taxable service’, cannot be sought to be recovered under the erstwhile provisions of Section 11D ibid when the sub-section (1A) thereof was not even inserted.
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Extended period of limitation - Just because the two audit objections were conveyed in a single letter by the department to the appellants, the fact of first show cause notice having been issued on earlier date for the first objection cannot be put forth as a ground that second SCN issued subsequently is barred by limitation.
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Works contract - Composition Scheme - allegation is that the appellant cannot opt to pay service tax under the composition scheme for the reason that they have failed to file intimation prior to payment of service tax under the composition scheme - Benefit of composition cannot be denied merely for procedural lapse.
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CENVAT Credit - common input services used in dutiable as well as exempted services - The demand is made only because they did not intimate the department that they are availing the option under Rule 6(3A) - demand cannot sustain for such procedural lapse.
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Voluntary Compliance Encouragement Scheme (VCES) - Right to appeal - CESTAT dismissed the appeal on the ground that VCES being a self contained code under Finance Act, 2013 without any appeal provision in the scheme and that the appeal is not maintainable. - Order of Tribunal set aside - Directed to hear the appeal on merit.
Central Excise
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Classification of goods - Herbal Sheekakai Powder and Herbal Reetha Powder with the brand name "Meera" - the product manufactured is for care of the hair, even though, it may have subsidiary medicinal properties - product rightly classified under CETH 3305.99
Case Laws:
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Income Tax
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2018 (9) TMI 1703
Reopening of assessment - non disclosure of capital gain arising out of the sale transaction in question - Held that:- The return filed by the petitioner was accepted without scrutiny. It is by now well settled that in such a situation, the Assessing Officer would have much wider latitude to reopen the assessment. Since in the original assessment no scrutiny was undertaken, the Assessing Officer cannot be stated to have formed an opinion. The principle of change of opinion therefore would not apply. Whether there is prima facie evidence suggesting transfer of capital asset or whether the petitioner is correct in contending that the entire transaction was fraudulent and no sale actually took place, are the issues we are not inclined to go into in the present petition. The petitioner must submit to the jurisdiction of the Assessing Officer who alone can ask relevant questions in this respect and take a final decision while framing re-assessment. If the Assessing Officer is prevented from carrying out assessment, the serious question of such assessment getting time barred by the time the petitioner's litigation before the Civil Court achieves finality. This is not a case where the very liability or in the present case, the question of gain is under litigation. What is under litigation is the factum of the transfer of capital asset. If eventually the petitioner losses in her challenge to the sale deed, the situation would be that the sale of the land by virtue of such deed, did actually take place as is recorded in the document, in which case, the petitioner must surrender the capital gain arising out of such transaction of capital asset to tax during the assessment year relevant to financial year when the transaction took place. Petition dismissed.
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2018 (9) TMI 1702
Assessment in the hands of representative assessee - Validity of reopening of assessment - income made by the nonresident Cricket Boards arise in India - Income deemed to have arisen to the non-resident in this country - Held that:- Section 9 merely tries to classify the income which is deemed to accrue or arise in India by saying that it should inter alia arise from business connection of the non-resident with India. Section 160 makes it abundantly plain that a representative assessee would represent the assessee in respect of a non-resident in respect of his income specified in Section 9. This simply means that a representative assessee would represent all income accruing or arising in India and not in a foreign country directly or indirectly from any business connection in India. It goes without saying that the representative assessee not only represents an income which has directly arisen or accrued in India but also that which has indirectly arisen or accrued in this country, through a business connection. Tribunal has made a complete misunderstanding of the law in entertaining the opinion that since the income made by the nonresident Cricket Boards were held to have directly arisen in India, this income could not be deemed to have arisen or accrued to the non-resident in India and the responsibility of the representative assessee was confined to accounting for income which had directly arisen or accrued in India. Furthermore, if the department chooses to make an assessment of the person resident outside India directly, there is no question of assessment of his agent or a representative assessee. Section 166 of the Income Tax Act, 1961 very clearly lays down that nothing in the foregoing sections relating to representative assessee shall prevent either the direct assessment of the person for whom the money is receivable. The Tribunal, in our opinion, made a clear mistake in believing that since it was held in an earlier proceeding that the income in question arose in India, a representative assessee could not be liable because it was only liable according to it in respect of the income which was deemed to have arisen in India - Decided in favour of revenue
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2018 (9) TMI 1701
Rectification of mistake - assessment of income - Held that:- Tribunal s previous order in the tax appeals of Shri M. N. Patel and the company it can be seen that the Tribunal was acutely conscious about three aspects of the matter. (i) Firstly, whether the entire amount of ₹ 2.27 lacs could be stated to be the income of Shri M. N. Patel and could be taxed in his hands. (ii) Having held that only 6.25% of such amount which came to ₹ 13.53 lacs could be taxed in the hands of Shri M. N. Patel as part of his share out of the company s profit, what would happen to the rest of the amount and (iii) whether the remaining sum of ₹ 2.16 crores could be taxed in the hands of the company. The Tribunal gave findings on all three aspects. Even after recording that Shri M. N. Patel can be taxed to the tune of ₹ 13.53 lacs of income the Tribunal gave reasons for holding that the remaining amount could not be taxed in hands of the company. Whether this conclusions are correct or incorrect surely the High Court will decide in the Revenue's tax appeal which is already admitted. However, this is not a case where the Tribunal failed to decide an important issue arising in the appeals or that the consideration of the Tribunal suffered from an error apparent on the record. As is well settled the jurisdiction of the Tribunal to rectify its own order is quite narrow and cannot be equated with the power of review which the Tribunal does not possess.
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2018 (9) TMI 1700
Eligibility for deduction u/s. 54F - investment in new asset was not in the name of assessee HUF contrary to provisions of section 54F but in the name of two of the members of the HUF.- Held that:- The materials on record would suggest that there was no dispute at the hands of the Revenue that the sale consideration arising out of the sale of the capital asset was used for acquisition of a new asset and that such newly acquired asset was also shown in the accounts of the HUF. Revenue's sole objection is that the sale deed was not executed in the name of the HUF but was in the name of two of the members of the HUF. Tribunal was right in coming to the conclusion that this was substantial compliance with the requirement of section 54F of the Act when neither the source of acquisition of the new capital asset nor the account of such new asset in the name of the HUF are doubted. Mere technicality that the sale deed was executed in the name of member of the HUF rather not HUF, would not be sufficient to defeat the claim of deduction. By mere names of the purchasers in the sale deed, the rights of the HUF and other members of the HUF do not get defeated. If at all, the persons' named in the sale deed hold the property of the trust for and on behalf of HUF and the other members of the HUF. In the present case, the capital asset was sold by the HUF and purchased by the HUF as reflected in the accounts. The names of two members of the HUF shown in the sale deed was only a cosmetic in nature. - Decided against revenue
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2018 (9) TMI 1699
Reopening of assessment u/s 147 - bogus purchases - Held that:- We are not inclined to interfere. According to Assessing Officer, VAS Infrastructure Limited is a shell company and the purchase and sale of shares in such company by investors was only for the purpose of showing profit or loss, which had actually not occurred. There was prima-facie information at the command of the Assessing Officer that the fluctuation in share price was not justified. All these materials were brought to his notice long after the assessment was over. The assessee, therefore, cannot take shelter of having made full and true disclosure. Further, to what exact income had escaped assessment may be open for argument, nevertheless, would not be a ground to quash the notice of reopening. To what extent; if at all the assessee’s income escaped assessment could be, in the present case, ascertained at the time of re-assessment. - Decided against assessee.
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2018 (9) TMI 1698
Addition u/s 68 for having unexplained income - guienity of creditors - Held that:- If the creditors are genuine and the transactions between those creditors and the assessee have been clean and honest, there is no need for the Court or any authority to try to unearth the source of the creditors’ funds from which he repaid the assessee. But when elements like collusion between the assessee and the so called creditors or setting up funds with the so called creditors to hold the assessee’s money and to retransfer it to the assessee or any other kind of fraud is involved then the bona fide of the creditors has to be clearly established and their source of fund explained, on a charge under Section 68 of the said Act. In our opinion the learned tribunal has not gone into the issue in detail. It should have gone into it, to determine, whether the appellant had unexplained income. For those reasons we remand the matter back to the Tribunal to decide this issue afresh.
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2018 (9) TMI 1697
Settlement applications u/s 245C(1) - rejection of application - Abatement of proceeding before Settlement Commission - Held that:- Considering the Scheme of Section 245HA and the object and purpose of proceedings before the Settlement Commission under Section 245 we are of the opinion that against the order passed by the Settlement Commission either rejecting and/or declaring the application invalid and/or considering the application for some of the years and not considering the application for all the years for which the application is submitted, only the assessee/ applicant can be said to be aggrieved. Therefore, the present petition at the instance of the Revenue challenging the order passed by the Settlement Commission not considering the settlement application for all the years for which the application was submitted is not required to be considered further on merits as the petitioner-Department cannot be said to be aggrieved by such an order. For the reasons stated even the submission on behalf of the Department at the instance of the Department that the applications were preferred before the amendment, i.e. prior to 1st June, 2007, and the order under Section 245D(1) has not been made before the 1st day of June, 2007, and therefore, such applications shall be deemed to have been allowed to be proceeded further, is not required to be entertained. For the reasons stated hereinabove, it is the assessee who has approached the Settlement Commission by way of application can make a grievance that in view of the deemed allowing the application, his application ought to have been considered for all the years for which the application was submitted. Number of submissions have been made by learned counsel appearing on behalf of the Revenue on whether the order dated 04.12.2007 by which the Settlement Commission decided to proceed further with the settlement application for some of the years only was received by the Department or not. Considering the material on record, it can be said that there are disputed questions of fact on the aforesaid. However, considering the subsequent communication which as such was received in which it is specifically mentioned and the Report was called only for some of years for which the order dated 04.12.2007 was passed, it can be said that the Department had the knowledge. That thereafter, the Settlement Commission has passed the final order under Section 245D(4) of the Act with respect to some of the years for which the order was passed dated 04.12.2007. Only thereafter, the Department woke up and submitted the rectification application which is rightly rejected by the Settlement Commission. Challenge to the order passed by the Settlement Commission on merits is by way of amendment and when the petition was preferred originally, no such averments were made. Even thereafter, there is no specific prayer to quash and set aside the order passed by the Settlement Commission on merits. Considering the limited scope of judicial review as pronounced by the Hon’ble Supreme Court as well this Court in a catena of decisions, the order passed by the Settlement Commission is not required to be interfered with. As observed by the Hon’ble Supreme Court and this Court in a catena of decisions, the Court is not required to consider the legality and validity of the order passed by the Settlement Commission as an appeal against the order passed by the Assessing Officer.
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2018 (9) TMI 1696
Additions u/s 50C - Computation of capital gain assessable in the hands of the assessee on transfer of a capital asset - Held that:- In the present case, we find that the assessee has contended that consideration of ₹ 3,00,11,000/- is more than the valuation for the purpose of stamp duty as on 8.2.2010. No where the assessee has pointed out specific rate on the date of agreement. Therefore, we allow these two grounds of appeal for the statistical purpose. This issue to the file of the AO. AO shall call for circle rate for the purpose of stamp duty valuation of this property as on 8.2.2010. He shall determine the sale value of the property on the basis of circle rate applicable on this property on 8.2.2010, and thereafter compute long term capital gain assessable in the assessment year 2013-14. Transfer of this property would be construed on 5.6.2012, but the full value of consideration is to be equivalent to the amount on which stamp duty was payable on 8.2.2010. Denial of deduction/exemption under section 54EC - advance received in specified assets before the date of transfer of asset - Held that:- Board has issued a circular whereby it has laid down that such assessee would be entitled for exemption. Circular bearing no.359 dated 10.5.1983 says As the section contemplates investment of the net consideration in specified assets for a minimum period and as earnest money or advance is a part of the sale consideration, the Board have decided that if the assessee invests the earnest money or the advance received in specified assets before the date of transfer of asset, the amount so invested will qualify for exemption under section 54E. We allow this ground of appeal and direct the AO to grant exemption under section 54EC
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2018 (9) TMI 1695
Bogus purchases - bills/vouchers for purchases of tyres and accessories not accepted - Held that:- We find no reason for not accepting the bills/vouchers for purchases of tyres and accessories as submitted by the assessee before us which was already placed before the ld. CIT(A). The bills and vouchers and relevant documents in support of the claim of the assessee which were though placed before the CIT(A) but was not considered by him and confirmation of addition of ₹ 32,500/- on such account that no case has been made to admit those additional evidence and also on the ground that these evidences were not placed before the AO cannot be appreciated by us. We are satisfied with the evidences as submitted before us and on the basis of such documents against which the payment were made, we delete the addition. - Decided in favour of assessee. TDS u/s 194A - interest on unsecured loan taken from one Mr.Pawan Kr. Patni and paid to one Shri R.P,Bajoria and others (HUF) on identified purposes - non deduction of tds - According to the assessee since the parties have filed their income tax return within the due period and paid necessary taxes thereon section 40(a)(ia) will not be applicable in this case - Held that:- Assessee has acted bona fide and there was no intention on its part to benefit the recipients of interest by way of not deducting tax from the interest so paid to these two parties. It appears that no reason has been assigned by the ld. CIT(A) while declining to apply the judgment of Right Address Ltd. Vs ITO TDS Ward-59(4) in favour of the assessee. He thus failed to distinguish the judgment on fact and on law while disapplying the same. Taking into consideration of the case made out by the assessee, the judgments as well, we allow the ground of appeal preferred by the assessee by deleting the addition as made by the authorities below. - Decided in favour of assessee.
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2018 (9) TMI 1694
Denying the exemption u/s 11 - charitable activity - business activity - generation of surplus - Held that:- The assessee’s major activities during the impugned AY were confined to conducting Award Functions / programs only. The only plea in support of the same as raised by Ld. AR is the assertion that the said activities were incidental to carrying out the main objectives of the assessee Trust and secondly, there was no profit motive in carrying out the same. In support, certain judicial pronouncements have been cited before us. TAR has also raised an alternative plea that the amount of ₹ 78.85 Lacs as written-off by way of credit to Profit & Loss Account had already been offered to tax in earlier years and therefore, the same is exclude while computing the surplus for impugned AY. In our opinion, these submissions require proper appreciation of factual matrix which has not been done by Ld. AO particularly the submissions that the activities being carried out by the assessee were incidental to carrying out the objectives on the basis of which registration was granted to the assessee. Keeping in view the aforesaid facts and circumstances, keeping all issues open, we deem it fit to restore the matter back to the file of Ld. AO for re-adjudication of the same with a direction to the assessee to substantiate its claim as argued before us
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2018 (9) TMI 1693
Expenditure not related to assessee trust - Disallowance of Education & charity fund, provision for loan loss and capacity building fund - addition of expenditure incurred as nothing but an application of income and the same is not related to the business activity of micro financing - Held that:- As observed that the assessee has transferred a sum of ₹ 31,07,126.97 to reserve for loan loss, ₹ 25,00,000/- to education and charitable fund and ₹ 15,00,000/- to capacity building fund. The respective balance carried forward thereafter in these funds is ₹ 58,65,198.35, ₹ 48,80,657/- and ₹ 15,00,000/-, respectively. Thus, it is observed that these amounts were not spent by the assessee during the year for carrying out the objects of the assessee trust. Hence, these are not amounts applied in the objects of the trust. Hence, the Assessing Officer as well as the CIT(A) were fully justified in not allowing the deduction for the same while computing the income of the assessee. - Decided against assessee.
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2018 (9) TMI 1692
Rejection of books of accounts - estimation of profit - Held that:- The fall in net profit rate cannot be brushed aside lightly. However, we find that the estimation of profit at 5.2% is from reasonable on the facts of the case and should meet the ends of justice. We, therefore, do not find any error or infirmity in the findings of the CIT(A) so far as the estimation of profit is concerned. However, in our considered opinion once net profit is estimated as a percentage of sales no further disallowances should be made in the profit and loss account. Since we have confirmed the estimation of net profit, we do not find any merit in the additions / disallowances made by the Assessing Officer. Provisions for bad and doubtful debts disallowance - Held that:- We find that the Assessing Officer has disallowed the same because he was of the opinion that the provisions for bad debts is not allowable. When the matter was agitated before the first appellate authority the First Appellate Authority confirmed the disallowance made by the Assessing Officer stating that the claim of bad debts is not in accordance with the provision of section 36 (2) of the IT Act and therefore cannot be allowed. Both the lower authorities have grossly erred in not appreciating the facts in true perspective. Both the lower authorities have ignored the fact that the asset side is actually reduced by the amount of bad debts which means that the debt has been actually written of. The Hon’ble Supreme Court in the case of Vijaya Bank [2010 (4) TMI 46 - SUPREME COURT] has categorically held that if the asset side is reduced by the provision it amounts to writing of the debts. Drewing support from the ratio laid down by the Hon’ble Supreme Court (supra), we direct the Assessing Officer to delete the disallowance on account of provision for bad debts.
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2018 (9) TMI 1691
TPA - rejection of aggregation approach adopted by the assessee while benchmarking its manufacturing activity - comparable analysis - Held that:- We find that similar issue arose before the Tribunal in assessee s own case in earlier years and the Tribunal in assessment year 2009-10 has decided the said issue in favour of assessee holding that various activities undertaken by the assessee are to be aggregated for determining arm's length price of international transactions. Most appropriate method to be applied - whether internal comparability was to be made i.e. profitability of export to associated enterprises was to be compared with domestic sales made by the assessee - Held that:- The said issue has been adjudicated by the Tribunal in earlier years and it has been held that TNMM method has to be applied and the margins of assessee are to be compared with average margins of external comparable companies. Treatment of export incentives while computing operating margins of assessee - AO/TPO held the same to be non-operating in nature, hence the same were excluded while computing operating margins of assessee - The case of Revenue was that the same are non-operating income and hence, the same are to be excluded from operating margins of assessee - held that:- We find that similar issue has been decided by the Hon ble Bombay High Court in CIT Vs. Welspun Zucchi Textiles Ltd. [2017 (1) TMI 1037 - BOMBAY HIGH COURT] and it has been laid down that DEPB benefit arising to the assessee therein was operating revenue includable in arriving at operating profit. Export incentives and scrap sales are to be included as operating income. Accordingly, we hold that export incentives are to be considered as operating income of assessee, while benchmarking international transactions of assessee. Benefit of range of +/-5% is available if the variation does not exceed the said tolerance margin. Disallowance made under section 14A - formula adopted by the assessee of allocating the cost to earning of exempt income has been adopted for working out disallowance - Held that:- Disallowance under section 14A of the Act is to be restricted to ₹ 17,63,981/-. Hence, the ground of appeal partly allowed. Disallowance made under section 35(2AB) - Held that:- The assessee during the year under consideration has also claimed weighted deduction claim under section 35(2AB) of the Act and the issue raised stands squarely covered by the orders of Tribunal in earlier years in the hands of assessee. Applying the same parity of reasoning, we direct the Assessing Officer to allow weighed deduction under section 35(2AB) of the Act to the assessee.
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2018 (9) TMI 1690
TDS u/s 194A - disallowance u/s 40(a)(ia) - interest paid on term deposits to the members by assessee Co-operative bank - Held that:- We find that similar issue i.e. the obligation of assessee Co-operative bank to deduct tax out of interest payment to the members or other Co-operative societies on time deposits arose in Saraswat Co-operative Bank Ltd. Vs. ITO and Anr [2017 (3) TMI 741 - BOMBAY HIGH COURT] as held The Explanatory Notes has made the position of law clear that such Co-operative Banks are not liable to deduct any amount from the TDS, prior to the effective date 1/06/2015. The appellant Co-operative Bank was not under obligation to deduct the amount from the TDS, for the assessment years prior to 1/06/2015 i.e. from 2010-11 to 2013-14. Assessee had not defaulted in not deducting tax at source out of such payments made to its members / Co-operative societies. Thus, there was no liability to deduct tax at source and the assessee cannot be said to have violated the provisions of section 194A - decided in favour of assessee.
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2018 (9) TMI 1689
Addition on account of seized material during the search - Held that:- CIT(A) held that though entries appeared to be sale transactions but addition cannot be made on the basis of GP. He gave the reason that no trading account, quantitative details or ledger accounts were produced. He further held that entire business of the assessee is undoubtedly unaccounted and therefore, he held that the gross profit cannot be added but the entire sale transaction requires to be added. However, he reduced the addition from ₹ 136489/- to ₹ 75965/-. Undoubtedly, the addition has been made on account of seized material during the search pertaining to the order and therefore, the ld AO is correct in taking cognizance of those incriminating documents for making addition during the year. - Decided against assessee. Gross profit estimation - unaccounted sales - Held that:- The assessee is in the business of jewellery. It deals in gold ornaments. Gold is general trading at margin of 1% to 2%. Unless assessee designs its own jewellery the profit margin is very low in that business as gold prices are transparent and readily verifiable. In the assessment year 2005-06 the ld CIT(A) has taken the gross profit ratio of 10%. According to us such percentage is very high and is comparable with other trading commodities. Therefore, such a high gross profit margin cannot be upheld. Therefore, we direct the ld AO to tax the income of the assessee @2% of unaccounted sales determined by the ld CIT(A) of ₹ 75965/-. In the result ground of the appeal of the assessee is partly allowed.
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2018 (9) TMI 1688
Condonation of delay - Held that:- There was a reasonable cause for the assessee to file the appeal before the ITAT with delay of 30 days. The lapse on the part of staff of the Chartered Accountants office should not make the assessee helpless. Therefore, we condone the delay and admit the appeal for adjudication. The assessee referring to the assessee’s letter dated Nil submitted that assessee wants to withdraw the appeal filed by him. On perusal of the assessee’s letter and having no objection from the side of Ld. DR, we allow the request of the assessee to withdraw the appeal. Accordingly, the grounds raised by the assessee in the appeal are dismissed as ‘withdrawn’. Appeal of the assessee is dismissed as ‘withdrawn’.
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2018 (9) TMI 1687
Computing the Annual Letting Value of the office premises at Nil u/s 23(1)(c) - Property remained vacant - applicability of Provisions of Sec. 23(1)(c) or determining the ‘annual value’ by pressing into service Sec. 23(1)(a) - Held that:- The usage of the term ‘Property is let’ in Sec. 23(1)(c) had purposively been used to exclude those properties from the ambit of the clause which are held by the owner for self occupation purposes, because even though the ‘annual value’ of oneself occupied property so chosen by the assessee is taken at Nil, however the ‘annual value’ of all the remaining self occupied properties are to be determined in terms of Sec. 23(1)(a) of the ‘Act’. Thus, to our understanding, though the term ‘Property is let’ used in Sec. 23(1)(c) is solely with the intent to avoid misuse of determination of the ‘annual value’ of self occupied properties by the assesses by taking recourse to Sec. 23(1)(c), however, the same cannot be stretched beyond that and the ‘annual value’ of a property which is let, but thereafter remains vacant for the whole year under consideration, though subject to the condition that the same is not put under self occupation of the assessee and is held for the purpose of letting out of the same, would continue to be determined u/s 23(1)(c). Assessee in the present case had rightly determined the ‘annual value’ of the property at Nil by taking recourse to Sec. 23(1)(c) of the ‘Act’. As in the case of the present assessee the property under consideration had remained let out for a period of 36 months, and thereafter though could not be let out and had remained vacant during whole of the year under consideration, but had never remained under the self occupation of the assessee, thus, no infirmity emerges from the computation of the ‘annual value’ of the said property under Sec. 23(1)(c) of the ‘Act’ by the assessee. - decided in favour of assessee.
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2018 (9) TMI 1686
Disallowance of expenses - genuineness of expenditure - dispute settled by Court of Arbitration - Held that:- Payments have been made through banking channel. From the details of expenses incurred by JBPL, exhibited elsewhere, it can be seen that all the payments have been made to Haryana Town and Planning Department. Thus, being statutory payments, their genuineness cannot be doubted. It would not be out of place to refer here that initially a dispute arose between the appellant and JBPL in relation to expenditure and the dispute was settled by Court of Arbitration, which held that this is the liability of the appellant-company, which has been discharged by JBPL. Interestingly, while framing the assessment in the case of JBPL for assessment year 2014-15, the Assessing Officer of JBPL has categorically held that expenses incurred by it has been reimbursed by the appellant company and hence the liability of JBPL seized to exist and the same is taxable u/s 41(1)(a) of the Act. The assessment order under consideration is dated 24.02.2014 and that of JBPL was framed on 29.12.2016 which means that it was passed subsequent to assessment order of the appellant company. The Assessing Officer of JBPL, while framing the assessment order in its case, has taken a clue from the arbitration award. The above facts clearly show that there was a liability of ₹ 53 crores which was discharged by the appellant company and claimed it as expenditure which it is lawfully entitled for. Both the lower authorities have grossly erred in not appreciating the facts in true perspective while making disallowance. Considering the facts of the case in totality, in our considered opinion, the assessee is entitled for deduction of ₹ 53 crores. We accordingly direct the Assessing Officer to allow the same. - Decided in favour of assessee Addition on account of failure by the assessee to prove the identity, credit worthiness and genuineness of the unsecured loans and advances received - Held that:- The undisputed fact is that the loan liability amounting to ₹ 2.66 crores is coming from earlier years and therefore, provisions of section 68 do not apply on the brought forward balances. In so far as unsecured loan of ₹ 1 crore is concerned, the same is received from another group Krrish Reality Ventures Pvt. Ltd which was also subjected search and whose assessment has also been framed by the same Assessing Officer and in its case, transaction has been accepted. Therefore, we do not find any reason to interfere with the findings of the ld. CIT(A). - Decided in favour of assessee
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2018 (9) TMI 1685
Disallowance on account of pro rata interest on loan given to sister concern u/s 36(1)(iii) - availability of own funds - Held that:- Hon ble Supreme Court in the case of CIT vs. Munjal Sales Corporation, [2008 (2) TMI 19 - SUPREME COURT] held that if assessee has huge interest free funds including the profit earned by the assessee during the year which is sufficient to cover the advancement of loan, then no interest should be disallowed. The assessee has demonstrated that the huge amount of money was lying in the capital of the partners and the profit earned during the relevant assessment year itself was approximately ₹ 1.19 crores. Therefore, such an availability of funds interest free is sufficient to cover up a small interest free loan of ₹ 16 lacs given to sister concern. Accordingly, the disallowance of ₹ 1,14,777/- is deleted. In the result appeal of the assessee is allowed. Rectification of mistake - Supporting manufacturers deduction u/s 80IB on duty drawback / DEPB allowed - Failure to apply the judgment of the Jurisdictional High Court - CIT(A) has rectified his order and has allowed this issue in favour of the department - Held that:- Following a binding judicial precedents of the Jurisdictional High Court in the rectification proceedings has been upheld by ACIT vs. Saurashtra Kutch Stock Exchange Ltd. (2008 (9) TMI 11 - SUPREME COURT), wherein held that failure to apply the judgment of the Jurisdictional High Court even rendered subsequently gives rise to a mistake apparent from records and the appellate authority has to rectify its judgment so as to bring in consonance with the judgment of the Hon ble Jurisdictional High Court. Therefore, we hold that there is no legal infirmity by the Ld. CIT (A) in rectifying his earlier order and same is much within the scope of section 154. Thus, the appeal of the assessee on this issue is dismissed. Levy of penalty u/s 271(1)(c) - disallowance of deduction u/s 80IB; and also on account of disallowance of pro-rata interest - Held that:- The assessee s claim of deduction u/s 80IB on Duty Drawback/DEPB at the time of filing of return was then supported by various judgments of the Tribunal which was also confirmed by the Hon ble Jurisdictional High court as discussed in the earlier part of the order. Under these circumstances it cannot be held that the assessee s claim at the time of filing of return of income was either not correct or was not bonafide. AO had relied upon the judgment of Liberty India vs. CIT (2009 (8) TMI 63 - SUPREME COURT) held that such a claim was not allowable even at the time of filing of return of income. However, such a reasoning is not held to be tenable, because the Hon ble High Court in its judgment and order dated 13th May, 2008 had considered various judgments of the High Court as well as the Supreme Court in the case of CIT vs. Baby Marine Exports,(2007 (3) TMI 206 - SUPREME COURT), wherein deduction u/s 80HHC on duty drawback/DEPB in case of supporting manufacturer was allowed. Thus, it cannot be held that assessee was guilty of furnishing of inaccurate particulars of income. Such a levy of penalty of disallowance of deduction cannot be upheld and same is directed to be deleted. - Decided in favour of assessee.
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2018 (9) TMI 1684
Rejection of books of accounts - profit estimation - rejecting books of account and thereafter applying a G.P. rate of 16.54% to the turnover is not upheld by CIT-A - Held that:- CIT(A) has correctly observed that GP rate cannot be static year after year and it is impacted by various economic factors and market conditions which admittedly are beyond the control of an individual taxpayer. Similarly, he has taken note of the fact that the records regularly maintained under the Excise Law cannot be ignored as these are relevant for Income Tax purposes also and in fact are complimentary to the income tax proceedings as these justify the production aspect with regard to the manufacturing quality, sizes, quantum of finished goods, raw material and other consumables on a day-to-day basis. In the face of the complete quantitative information in connection with purchases, production and sales details available to the AO who has not pointed out any defect with evidence in the audited books of accounts and there is no such finding of fact that the assessee has inflated the cost of raw material or cost of manufacturing or suppressed its sale prices order, or that it has made purchases of raw material or sale of finished goods outside the books. Since the quantum of production and turnover has been accepted, the rejection of books of accounts in the peculiar facts and circumstances has been held to be inapplicable and we find no good reason available on record on the basis of which the said conclusion can be varied. - Decided against revenue
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2018 (9) TMI 1683
Addition u/s 68 - long term capital gain on account of sale of shares was denied on the basis of Investigation Wing - addition towards consideration received for sale of shares as unaccounted income - application of rules of ‘Suspicious Transaction’ - Held that:- As decided in the case of Prakash Chand Bhutoria [2018 (7) TMI 46 - ITAT KOLKATA] there cannot be any doubt about the transaction as has been observed by the Assessing Officer. The transactions were as per norms under controlled by the Securities Transaction Tax, brokerage service tax and cess, which were already paid. They were complied with. All the transactions were through bank. There is no iota of evidence over the above transactions as it were through d-mat format. See CIT, Kolkata-III vs. Smt. Shreyashi Ganguli reported in [2012 (9) TMI 1113 - CALCUTTA HIGH COURT] - Decided against revenue.
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2018 (9) TMI 1682
Unexplained investment - shares received as gift from father - sources for making investment in new flat - Shares Received by way of gift from father and declared under VDIS scheme by grandfather of the assessee - Held that:- The assessee has claimed that since AY 2009-10 onwards, the dividend income arisen from these shares was regularly declared by assessee to Revenue from year to year in return of income filed with Revenue and hence the said shares cannot be classified as undisclosed investments, we agree in principle with the contention of the assessee that no addition is warranted for the impugned assessment year if the said shares were disclosed to Revenue from year to year in preceding years, wherein bank account as well income arose from these shares by way of dividend were on record with the Revenue. The demat accounts are linked with bank account and the dividend etc is received electronically in the bank account linked with the demat account. The assessee has one saving bank account with Bank of Maharashtra and one demat account with Saraswat Co-operative Bank Limited. In any case if Revenue wanted to make additions on this count, it is the first year i.e. AY 2009-10 when declaration and disclosure was made for the first time for such shares, the additions could have been made by Revenue towards unexplained investment but not the year under consideration. Under these circumstances, the said shares cannot be classified as unexplained investments for the year under consideration before us. Principally agreeing with the contentions of the assessee, we are remitting the matter back to the file of the AO for limited verification purposes and if it is found these shares acquired by the assessee between AY 200506 to AY 2008-09 were declared to Revenue vide declaration of dividend income from these shares were credited in saving bank account maintained with Bank of Maharashtra which was declared in the return of income filed with Revenue from year to year thereafter since AY 2009-10 albeit dividend income was claimed exempt from tax, then the said additions as were made by the AO for shares acquired between AY 2005-06 to AY 2008-09 shall be deleted by the AO as these investments were duly declared and disclosed investments. - Decided in favour of assessee for statistical purposes. Adopting corrected figure of sale of shares and capital gains arisen thereof - Held that:- The mandate of the 1961 Act is to compute and collect correct income-tax which is supported by Article 265 of the Constitution of India. AO was not entitled to accept the revised claim of income filed otherwise through revised return of income keeping in view aforesaid decision of Hon’ble Supreme Court in the case of Goetze (India) Limited [2006 (3) TMI 75 - SUPREME COURT] but learned CIT(A) ought to have accepted the claim of the assessee to bring to tax correct income. This view is supported by decision of Hon’ble jurisdictional High Court decision in the case of Pruthvi Brokers and Shareholders [2012 (7) TMI 158 - BOMBAY HIGH COURT]. Thus, we accept the contention of the assessee and let the correct revised figure of sale of shares be adopted. Decided in favour of assessee
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2018 (9) TMI 1681
Bogus purchases - The case of the Assessing Officer is that on examination of the issue of purchases of jowar; he finds and holds that these purchases amounting to ₹ 10,00,538 are to be disallowed as they are not verifiable and also not debited to the assessee's profit and loss account. Held that:- If, as held by the Assessing Officer that, these purchases are both unverifiable and not debited to the assessee’s profit and loss account, then the same could not be disallowed as no claim for such debit has been claimed by the assessee in the profit and loss account. In this factual view of the matter, as per the peculiar facts and circumstances of the case on hand, we delete the aforesaid disallowance of ₹ 10,00,538 made by the Assessing Officer. - Decided in favour of assessee
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2018 (9) TMI 1680
Disallowance of Mark to Market loss claimed - AR submitted that the loss was actual component loss and the profit has been accepted by the Assessing Officer and only loss has been disallowed by the Assessing Officer which is not permissible under the Act - Held that:- CIT(A) has given a detailed finding as there was no dispute that the transactions were rendered through recognized registered brokers and notified exchange and each transactions was carried out electronically on screen basis system. This finding was not contradicted by the Ld. DR. Therefore, Ground No. 1 and 2 of the Revenue’s appeal are dismissed. Addition u/s 14A - Held that:- As borrowed money utilised for such investment and therefore, no interest was paid by the assessee. This position was not contradicted by the Ld. DR. Ground No. 3 is dismissed. Therefore, there is no need to interfere with the order of the CIT(A). Hence, appeal of the Revenue is dismissed.
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2018 (9) TMI 1648
Appeal admitted for the following question: (d) Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in considering the interest earned on inter-corporate deposits by the assessee to the tune of ₹ 474.62 lacs under the head ‘Profit and Gains of business’ instead of ‘Income from other sources’ without appreciating that assessee is not regularly carrying on business of financing or lending of money as a systematic activity?
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Customs
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2018 (9) TMI 1679
Principles of natural justice - case of petitioner is that the petitioner was not afforded an opportunity to cross-examine the prosecution witness nor was the request for cross-examination dealt with by the impugned order - respondents submits that the petitioner did not indicate the reason as to why the cross-examination was required. Held that:- In an adjudication proceeding which is adversarial in nature, a party adducing evidence through a natural person is required to allow cross-examination of such natural person, to the other side - In the present case apparently the prosecution was relying upon evidence adduced by natural persons in the proceeding. The prosecution, therefore, ought to have allowed such persons to be cross-examined. When, a contesting party in adversarial litigation adduced evidence through a natural person, it results in a corresponding right to the opposite party in such adversarial proceeding to crossexamine such natural person. In absence of such cross-examination being allowed or facilitated the evidence given by such natural person has no evidentiary value and cannot relied upon - The adjudicating authority not having considered the request for grant of crossexamination of the prosecution witness, the impugned order stands vitiated by breach of the principles of natural justice. The impugned order is quashed.
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2018 (9) TMI 1678
Maintainability of petition - the statutory remedies provided under the Customs Act not exhausted - Benefit of N/N. 46 /2011 Cus dated 01.06.2011 - concessional rate of basic customs duty for all goods classifiable under heading 480830 to 480990 - import of of Carbonless Paper Black Image, classifiable under customs tariff heading 4809. Held that:- This Court is of an opinion that the Appellate Tribunal constituted under the said Act is empowered to adjudicate all the legal grounds raised by the writ petitioner in the present writ petition and also the factual disputes. Such being the powers of the Appellate Tribunal, the writ petitioner has to approach the Tribunal for an appropriate adjudication to resolve the issues and redress his grievances - Usurping the powers of such Appellate Tribunals created under the Act cannot be done in a routine manner by the Constitutional Courts. Institutional respects are to be maintained in respect of taking decisions by the competent authorities. The institutions created under the statutes must be allowed to exercise their powers and functions in the manner known to law. Intermittent Interventions frequently by the Courts will create unnecessary complications and will pave way for conflicts and the decisions in such issues. The issues raised by the writ petitioner in the writ petition cannot be adjudicated as the Appellate Tribunal is empowered to adjudicate all such disputes. The institutional functions and exhausting the appeal remedies by the aggrieved persons, are to be enforced in all circumstances and writ proceedings can be entertained only on exceptional circumstances. Rule is to prefer an appeal and entertaining a writ is only an exception. This being the legal principles to be followed, this Court cannot entertain the writ petitions in a routine manner by waiving the remedy of appeal provided under the statute. The writ petitioner is at liberty to approach the appropriate Appellate authorities and thereafter, before the Appellate Tribunal constituted under Section 129(A) of the Customs Act,1972 for the purpose of redressing his grievances in the manner known to law - petition dismissed being not maintainable.
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2018 (9) TMI 1677
Misdeclaration of Export goods - MOP of Fertilizer grade attempted to be exported in the guise of OWC (Drilling Chemical Additive) - restricted item - whether the goods attempted to be exported by the appellant were muriate of Potash of fertilizer grade or the same were OCW as declared by the assessee? Held that:- The sample reports of both CRCL and SIIR confirmed the goods as MOP of fertilizer grade. It is seen that CRCL has submitted two reports vide their letters dated 08.12.2009 stating that the sample is in the form of white granular powder. It has the characteristics of muriate of Potash fertilizer grade . The said report was further elaborated by CRCL vide their letter dated 21.10.2009 indicating that percentage of K20 (Potash content) is as 62.61% and 62.71% by weight - Not only the reports of CRCL and SIIR have established that K2O present in the goods was more than 60%, but Shri Sikandar Alam has also informed the specifications of the goods as having K2O content more than 60%. Revenue has not only relied upon the said test reports solely, but have made further investigations also. As a result, it was found that the goods in question were imported in India by Indian Potash Ltd. for use by farmers as fertilizers. These goods have been supplied by IPL to their fertilizer dealer on subsidized rates, fixed by the Government for farmers - As such it gets established beyond doubt that what was purchased by the appellant from M/s.Lalita Prasad Sons was nothing, but MOP, fertilizer grade, the export of which is banned in India. Export of such MOP is admittedly banned inasmuch as the same was being supplied at subsidized rates fixed by Govt. of India and was meant for Indian farmers at a subsidized price. The appellants have procured the same at that subsidized price only from M/s.Lalita Prasad Solns and illegal export of the same, for personal gains by the appellant, at the cost of the farmers of the country and exchequer, become a serious offense punishable under the law - absolute confiscation upheld - Penalty of ₹ 50.00 Lakhs imposed on the appellant. Appeal dismissed - decided against appellant.
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2018 (9) TMI 1676
Effective date of Notification 79/2008-Cus. dated 13.6.2008 enhancing the rate of Export Duty - On 13.6.2008, the goods were cleared for export after issuance of let export order. On the same date, Notification was issued, but was offered for sale on a later date - Effect of Notification - Held that:- The notification will come into force only after clause (b) of sub-clause (4) of Section 25 is also satisfied - In the present case, the information received under RTI Act from the Government of India Press shows that the notification was offered for sale or sent to the department only on 27.6.2008. Therefore, the notification cannot be said to have come into effect from 13.6.2008. It is pleaded by the appellant that the said information was received by the appellant only after filing the appeal and has prayed that the said document may be received as part of evidence - there are no reasons to discard the plea put forward by the appellant for the simple reason that the said information is a document issued under RTI Act by the concerned officer who is the CPIO and is authorized to issue such information. The issue as to when the notification would take its effect and the necessity for fulfilling the conditions in sub-clause (4) of Section 25 of the Customs Act has been addressed by the Hon ble Supreme Court in the case of Param Industries Ltd. [2015 (6) TMI 732 - SUPREME COURT], where it was held that Though the notification may have been published on the date when the goods were cleared, it was not offered for sale by the concerned Board, which event took place much thereafter. Therefore, it was not justified and lawful on the part of the Department to claim the differential amount of duty on the basis of said notification. Thus, the notification has not come into force on 13.6.2008 and therefore the appellant cannot be compelled to pay higher rate of duty as per the notification - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 1675
Rectification of Mistake - case of appellant is that the appellant had imported 28 Electrical Multiple Units (EMUs) (Metro Coaches) and the dispute was with regard to the classification of these items. In para 2 of the final order, instead of noting the number of coaches imported as 28 EMUs, by typographical error it has been mentioned as 25 EMUs and the same requires to be corrected. Held that:- This is merely a typographical error which requires rectification - rectification allowed - ROM Application allowed.
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2018 (9) TMI 1674
Interest on delayed SAD Refund - N/N. 102/2007 dt. 14.09.2007 - refund was rejected on the ground of time bar - The appellant ere not issued with deficiency memo to produce Chartered Accountant Certificate and the memo was produced when the matter was remanded by Tribunal to Adjudicating authority and it is then the case of the Department that the time has to be computed only from the date on which the respondent produced the Chartered Accountant Certificate. Held that:- The argument of Department is not acceptable. If there was any deficiency in the documents, the Department ought to have issued a Deficiency Memo stating that the Chartered Accountant Certificate is not proper at the time of receipt of the refund application itself. After the matter has travelled up to the Tribunal, the Department cannot issue a fresh Deficiency Memo to put forward a further ground for denying the refund. The decision in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. [2011 (10) TMI 16 - SUPREME COURT OF INDIA] applies to the present case, where it was held that Liability of the revenue to pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made. Interest allowed - appeal dismissed - decided against Revenue.
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2018 (9) TMI 1673
Valuation of imported goods - 100% Cotton Knitted Men’s T.shirt - according to Revenue, there was Over-valuation which was abnormally high to claim higher Duty Drawback - Revenue relied upon the report of the Valuation Committee - rejection of declared value u/r 8 of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 - Held that:- This Bench of the Tribunal in the case of Woodern Style Plus Exports Vs. Commissioner of Customs & Central Excise, Tiruchirapalli [2018 (7) TMI 709 - CESTAT CHENNAI] has held that Apart from the report of the Valuation Committee, there is no other evidence to show over-valuation of the cargo. Even the status of the Valuation Committee does not stand disclosed i.e., as to who were the members of the said Committee, how they arrived at the value?; what was the basis of the findings? and what was the technical and expert qualification of the said members? and so impugned orders are not sustainable. Demand set aside - appeal allowed - decided in favor of appellant.
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Corporate Laws
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2018 (9) TMI 1704
Winding up petition - whether the company could have been ordered to be wound up, when admittedly, the advertisement issued in terms of the said rules, made no reference whatsoever to the changed name? - Held that:- Rule 9 of the said rules, no doubt retains inherent powers in a Company Court to give such directions or pass such orders as may be necessary for the ends of justice or to prevent the abuse of the process of the Court. As noted earlier, this is not a case of some inconsequential defect in the advertisement. Rather this is a case where the advertisement does not even reflect the changed and correct name of the company. Therefore, the contention that this is a case of deemed exercise of inherent powers, cannot be accepted. For all the aforesaid reasons, we dispose of this appeal making the following order : (a) The impugned order dated 21st June, 2018 is set aside; (b) The Company Petition No. 829 of 2003 is restored to the file of the learned Company Judge, so that the petition may proceed from the stage of publication of advertisement, this time in the correct name of “Splendour Gems Limited” (formerly known as “Beautiful Diamonds Limited”); (c) We make it clear that we have not examined the merits of the matter, therefore, all contentions of all parties are left open for decision by the learned Company Judge; (d) Parties to appear before the learned Company Judge on 15th October, 2018 at 11.00 a.m. and produce an authenticated copy of this order.
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Service Tax
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2018 (9) TMI 1672
Voluntary Compliance Encouragement Scheme (VCES) - Right to appeal - CESTAT dismissed the appeal on the ground that VCES being a self contained code under Finance Act, 2013 without any appeal provision in the scheme and that the appeal is not maintainable. Held that:- The issue decided in the case of Narasimha Mills Pvt. Ltd. vs. Commissioner of C. Ex.(Appeals), Coimbatore, [2015 (6) TMI 787 - MADRAS HIGH COURT] where the Madras High Court, by specific observation, dismissed the appeal on the ground that there is no remedy of appeal in the scheme would be giving unfettered power to the authority and same is not acceptable. There is no reason to adopt a different approach and view than the approach and view adopted by Madras High Court. - The CESTAT directed to hear the appeal afresh and pass appropriate orders on merit of the appeal. Decided in favor of assessee.
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2018 (9) TMI 1671
CENVAT Credit - common input services used in dutiable as well as exempted services - non-maintenance of separate records - Rule 6(2) of CENVAT Credit Rules, 2004 - whether the demand can sustain and when the appellant has not followed the requirement of intimating the department about availing the option as to Rule 6(3A) of CENVAT Credit Rules, 2004? - Held that:- The demand is made only because they did not intimate the department that they are availing the option. The said requirement is only a procedural requirement, the Tribunal in the case of Mercedes Benz [2015 (8) TMI 24 - CESTAT MUMBAI] has held that the demand cannot sustain for such procedural lapse - demand cannot sustain - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 1670
Construction of Complex Service - appellant executed works contract pertaining to construction of police quarters - Held that:- The appellant has provided construction activity for construction of police quarters which is owned by TNPHCL, which is a Government undertaking - The Tribunal in the case of M/s. SIMA Engineering Constructions [2018 (5) TMI 405 - CESTAT CHENNAI] has considered the very same issue and held to be not taxable - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 1669
Valuation - Erection, Commissioning and Installation service - allegation is that the appellant has paid the service tax only on the civil construction part of the contract and that has artificially bifurcated the turnkey project into three separate contracts - Held that:- It is very much clear from the facts that the appellants had entered into different contracts with separate agencies - the issue decided in appellant own case [2018 (2) TMI 148 - CESTAT CHENNAI], where it was held that the appellant will be entitled to the benefit of abatement under Sl.No. 7 of the Notification ibid - the said allegation or the demand on this count cannot sustain and requires to be set aside. Composition Scheme - procedural lapse - allegation is that the appellant cannot opt to pay service tax under the composition scheme for the reason that they have failed to file intimation prior to payment of service tax under the composition scheme for works contract service - Held that:- In Vaishno Associates [2018 (3) TMI 417 - CESTAT NEW DELHI], the Tribunal has considered the said issue and held that it is only a procedural one and that the substantial benefit cannot be denied for procedural lapse - demand do not sustain. Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 1668
Business Auxiliary Service - appellants are engaged in distilling and bottling of Indian Made Foreign Liquor (IMFL) which includes their own brand as well as brands owned by United Sprits Ltd., Bangalore - Department also took the view that the amount charged by appellants towards provision of the said service would be the value of taxable service; that they would not be eligible to avail exemption under Notification No.39/2009-ST dt. 23.09.2009 - Time Limitation. Time Limitation - the issue in the present appeal is covered in by DAR No.4. This is a separate objection conveying that appellants had not complied with conditions of non-availment of cenvat credit and evidence showing value of inputs specifically in the invoices raised etc. hence they were requested to offer explanation in that regard along with contract / agreements, accounts relating to job work etc. - Held that:- Just because the two audit objections were conveyed in a single letter dt. 05.12.2013 by the department to the appellants, the fact of first show cause notice having been issued on earlier date for the first objection cannot be put forth as a ground that second SCN issued subsequently is barred by limitation - contention of applicant is rejected. Taxability of activity of contract bottling - appellant has also contended that issue of taxability of activity of contract bottling is still pending before the Hon ble Apex Court since appeal of International Spirits Wines Association of India (ISWAI) [2016 (12) TMI 1739 - SUPREME COURT] - Held that:- N/N. 39/2009-ST concerns the manner of taxability of BAS provided by an assessee by way of manufacture or processing of alcoholic beverages for or on behalf of the service recipient. As per the notification for calculating taxable value, the value of inputs excluding capital goods, used for providing said service is to be excluded, provided the assessee satisfies the conditions (a), (b), (c) thereof; in particular, not taking any cenvat credit and there is documentary proof indicating the value of such inputs. Evidently then, the notification seeks to exclude predominant portion of the materials cost - In any case, it is found that the taxability of activity of contract bottling has already been confirmed by the High Court of Delhi in the Carlsberg India case [2016 (8) TMI 250 - DELHI HIGH COUR]. The appeal filed by ISWAI has only been admitted by the Hon ble Apex Court. However, no stay on taxability has been ordered by the Hon ble Apex Court. Hence this contention of the appellant also does not stand to scrutiny and is therefore rejected. Benefit of N/N. 39/2009-ST - Reversal of CENVAT Credit alongwith Interest - Held that:- The Hon ble Supreme Court in Chandrapur Magnet Wires [1995 (12) TMI 72 - SUPREME COURT OF INDIA] has held that reversal of modvat credit is permissible to avail exemption - thus, the benefit of Notification No.39/2009-ST dt. 23.09.2009, which otherwise mandates non-taking of credit for duty exemption, will now become available to the appellant. However, appellant shall pay up the interest liability on the quantum of credit availed under the Cenvat Credit Rules, 2004 during the period of dispute within a period of four weeks, only after which the matter shall be taken up for de novo adjudication as ordered by the adjudicating authority. Appeal disposed off.
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2018 (9) TMI 1667
Business Auxiliary Service - engagement of agents in foreign countries by the appellant for promoting, sales, securing orders - Held that:- This Tribunal in the case of Maxican Exports Vs. Commissioner of Central Excise, Tiruchi [2018 (8) TMI 819 - CESTAT CHENNAI], where it was held that Service tax if any payable under reverse charge is permissible to be availed as cenvat credit and that may be refundable under Notification No.41/2007 unless otherwise deniable by law - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 1666
Valuation - inclusion of reimbursable expenses in assessable value - Held that:- The issue is decided in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT OF INDIA], where it was held that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax - demand do not sustain. CENVAT Credit - input service used for non-taxable output service - Held that:- In the case of THE COMMISSIONER OF CENTRAL EXCISE BANGALORE-V VERSUS M/S. VISHAL PRECISION STEEL TUBES AND STRIPS PVT. LTD. [2017 (3) TMI 1287 - KARNATAKA HIGH COURT], it was held that The final product is treated as dutiable and duty is paid by the assessee. When once duty is paid by the assessee treating the activity as manufacturing activity by the Department, CENVAT credit is available and there is no question of reversal of CENVAT credit - credit remains allowed. Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 1665
Intellectual Property Service - Extended period of limitation - Appellant refined crude edible palm oil belonging to others, affixed their brand name ‘ROOBINI’ on the packages and collected brand royalty commission of ₹ 100/- per MT from such clients - Held that:- It is not the case that the appellant had informed the department about these transactions in ER-I returns. This being so, the extended period, can very well be invoked and hence the entire demand of service tax of ₹ 1,74,782/- with interest thereon is not being interfered with - However, taking into consideration that the issue was interpretational and there was reasonable cause for the failure to pay tax, the penalties imposed are set aside. Demand of ₹ 41,820/- under C&F Agent Service - Held that:- Following the ratio in Kulcip Medicines (P) Ltd. [2009 (2) TMI 89 - PUNJAB AND HARYANA HIGH COURT], the demand is unsustainable and requires to be set aside - Demand set aside. Appeal allowed in part.
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2018 (9) TMI 1664
Business Exhibition’ service - Department is of the view that during the relevant point of time, management of business exhibition and other events were liable to service tax under Event management Service - Section 73A (2) of the Finance Act, 1994 read with Section 11D of the Central Excise Act, 1944 - Held that:- Business Exhibition Services were made exigible to service tax only w.e.f. 10.09.2004 - As per Section 11D of the Central Excise Act, 1944, as applicable to service tax matters, during the period of dispute, only amounts of tax collected in excess of what was assessed and determined on ‘taxable service’, was required to be paid to the credit of the Central Government. This position was altered only by the introduction of sub-section 1A in Section 11D on 10.05.2008 by Finance Act, 2008. So also, Section 73A of the Act was inserted only w.e.f. 18.04.2006 by Finance Act, 2006. The amounts collected during the impugned period on a service which was not then a ‘taxable service’, cannot be sought to be recovered under the erstwhile provisions of Section 11D ibid when the sub-section (1A) thereof was not even inserted - The demands made therefore are outside of the scope of the statutory provisions as prevailed during the period of dispute. Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 1663
Outdoor Catering service - supply of food made in the hotel to the client premises - Case of appellant is that the activity is only sale of foods involving delivery at the premises of M/s. Mitsubishi - Department is of the view that since some person from the hotel goes to the company the activity falls within the definition of outdoor catering. Held that:- The element personalized service is involved in outdoor catering. In the present case, it is very much clear from the facts that the appellant is merely delivering the food to the company and there is no service element involved. - If one person goes to the premises of the company to check whether the food is sufficient, it can be overseeing the activity of sale of food. But this cannot be considered as catering to the service of the customer. Identical issue decided in the case of M/S AMBEDKAR INSTITUTE OF HOTEL MANAGEMENT VERSUS COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, CHANDIGARH [2015 (9) TMI 163 - CESTAT NEW DELHI], where it was held that Since the appellant are preparing mid day meals in their Institute and not in the schools where the meals are served are not involved in serving of the meals in any manner, in our view they are not covered by the definition of "outdoor caterer" and hence their activity of preparing and supplying meals for mid day scheme would not be covered by the definition of taxable service under Section 65(106(zzt). The activity does not fall within the definition of outdoor catering service - demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 1662
Business Auxiliary Service - Commission received by appellant from M/s. Galileo India Pvt. Ltd. for using the Galileo Centralized Reservation System (CRS) - Commission received by appellant for promoting business of Western Union Money Transfer Services in India. Commissions or incentives received for use of Centralized Reservation System - Held that:- There are a number of decisions which have held that the said activity is definitely in the nature of Business Auxiliary Service and consequently, the commissions/incentives received thereon are exigible to service tax liability under that category - reliance placed in the case of New Royal Link Travels and Ors. Vs. CST, Chennai [2018 (3) TMI 115 - CESTAT CHENNAI] - demand upheld. Money Transfer Services - Held that:- Tribunal in Muthoot Fincorp. Ltd. Vs. Commissioner of C. Ex., Visakhapatnam [2009 (8) TMI 236 - CESTAT, BANGALORE], where it was held that the benefits of service are accrued to a person outside India and hence, they are not liable to service tax under Business Auxiliary Services - demand set aside. Penalty - Held that:- Both the disputed issues had been mired in litigation and hence, there cannot be any penalty imposable in such situations - Demand set aside. Appeal allowed in part.
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2018 (9) TMI 1661
Reversal of CENVAT Credit - Prescribed formula - Since appellant were providing both taxable and exempted services, they opted for reversal of proportionate credit of service tax in terms of the formula given in Rule 6 (3A) of Cenvat Credit Rules, 2004 - reversal as per formula prescribed under Rule 6 (3A)(b)(iii) - Held that:- There is no dispute that the appellant has discharged the service tax liability on Financial Leasing Services by availing the exemption under N/N. 4/2006, dated 01.03.2006. The said notification specified that service tax is required to be paid on a value equal to 10% of the total amount representing interest. Balance 90% will enjoy exemption from payment of service tax. For Financial Leasing Services under section 65 (105)(zm), there is no doubt that service tax is payable even though a part of it is exempted by the above notification. Since service tax is payable, the said service cannot be covered by the definition of “exempted services” - once it is concluded that the Financial Leasing Service is not an exempted service, there is no justification in considering the portion of the value of taxable service exempted vide N/N. 4/2006, dated 01.03.2006 to be included in the formula for determining the amount to be reversed. Appellant has already reversed the Cenvat credit determined in terms of the above formula without including the portion of the value exempted under N/N. 4/2006 - there is no justification to order any further reversal. Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 1660
Construction of Residential Complex Service - it was alleged that appellant had failed to file proper statutory half-yearly ST-3 returns with correct taxable value - demand alongwith interest and penalties - Held that:- The very same issue decided in the case of Ramalingam Construction Co.(P).Ltd. Vs. Commissioner of Central Excise& Service Tax, Salem [2018 (7) TMI 620 - CESTAT CHENNAI], where it was held that The periods of demand in all these disputes related to construction of residential complexes for KHB etc. spans from 2005 to 2015. There are merit in the appellant’s contention that demands on this score prior to 1.6.2007 is liable to be set aside in view of the decision of the Hon’ble Apex Court in CCE & CC Kerala Vs Larsen & Toubro Ltd. [2015 (8) TMI 749 - SUPREME COURT]. For the period subsequent to 1.6.2007, In a number of decisions, the higher appellate forums have consistently held that there is no liability to pay service tax for the reason that the complex so constructed are intended for personal use which is excluded in the definition of construction of residential complex. Demand set aside - appeal dismissed - decided against Revenue.
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2018 (9) TMI 1659
Rectification of mistake - case of applicant is that the Delhi Bench of the Tribunal has extended the benefit of Composition Scheme in the case of M/s. Vaishno Associates Vs Commissioner of Central Excise and Service tax, Jaipur-I [2018 (3) TMI 417 - CESTAT NEW DELHI] - Held that: The Tribunal, in the said decision has denied the benefit of the Composition Scheme as the appellant has failed to exercise the option under the relevant Rules - To a specific query from the Bench learned Advocate, admitted that the said decision of the Tribunal was not brought to the notice of the Bench during the hearing. In the circumstances, there is no ground for modification of the final order already issued. Any such modification as prayed by the appellant would amount to review of the order already passed, which is not permissible under rectification of mistake application - Under ROM only such mistakes which are apparent from the record may be corrected. ROM Application dismissed.
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2018 (9) TMI 1658
Ascertainment of rate of Service Tax - taxable event - point of taxation rules - demand of differential service tax and interest under Section 73(1) and 75 of the Finance Act - case of respondent is that the rate of tax is the rate in force on the date of providing service and that the respondent had correctly paid the service tax - whether the appellant is liable to discharge service tax @2% or 4% on the service charges realized during the month of March, 2008? Held that:- An identical issue has been decided by this very Bench of the Tribunal in the case of Commissioner of Service Tax, Chennai Vs. M/s. Consolidated Construction Consortium Ltd. [2018 (2) TMI 480 - CESTAT CHENNAI], where reliance placed on Hon'ble High Court of Gujarat in the case of Commissioner of Central Excise Vs. Schott Glass India Pvt. Ltd. [2009 (1) TMI 45 - HIGH COURT OF GUJARAT] has held that taxable event is the time of rendering the taxable service and not realization of payment thereof. Appeal dismissed - decided against Revenue.
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2018 (9) TMI 1657
Classification of services - appellant had outsourced their matrimony activity to other associate centers and had entered into franchise agreement with these associate centers - whether classified under Franchise service or under transfer of intellectual property service? Held that:- The recital of the agreement in the first paragraph itself states that the appellant (formerly Bharatmatrimony.com) is referred as a franchisor and the associate member with whom the agreement is entered is referred to as the franchisee - it is not an agreement for mere transfer of intellectual property. In fact, the franchise agreement stipulates for payment of franchise fee charged by the franchisor upon the franchisee. The argument of the ld. counsel that it involves only transfer of intellectual property cannot be accepted for the reason that the agreement involves conditions wherein the manner of functioning and operation of the associate center is laid down. Thus the franchisor has a right to dictate or direct how the franchisee has to carry on the business. There is also a condition for the franchisee to attend the training conducted by them - demand with interest upheld. Time limitation - Held that:- The mere fact that audit was conducted cannot be a ground to contend that the extended period cannot be invoked. Further, in the present case, show cause notice is issued on 14.3.2008 for the period January 2006 to March 2007. The appellants have not disclosed in the ST-3 returns that they were engaged in franchise service - time limitation not applicable. Penalty - Held that:- Taking note of the fact that the audit had occasion to see the agreement in 2006, the penalties are unwarranted and requires to be set aside. Demand with interest upheld - penalty set aside - appeal allowed in part.
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2018 (9) TMI 1656
Valuation - inclusion in assessable value - Threading charges - Negative Storage charges - case of appellant is that threading charges are nothing but cost of the film on which they have discharged VAT liability and Negative Storage Charges relate to reimbursement of electricity charges and rent recovered from the clients - Held that:- It is noted that right from the initial adjudication proceedings and even at this stage appellants have not been able to produce the necessary evidence in support of these claims. This being so, the demand confirmed by the original authority and upheld in the impugned order will sustain - demand upheld. Penalty u/s 78 - Held that:- The entire issue is one of interpretation - It is also to be kept in mind that had the appellant been able to produce the necessary evidence, they may well have got relief in respect of service tax liability on Threading charges and Negative Storage charges - Penalty not warranted and is set aside. Appeal allowed in part.
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Central Excise
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2018 (9) TMI 1655
CENVAT Credit - inputs - HR coil, steel plates, MS channel, MS plates etc. for the construction of three storage tanks of 3600 MT each in capacity which are used for storing crude palm oil, palm oil and palmolein oil - Whether the appellants are eligible for credit on the impugned steel items which were used for fabrication of storage tanks used for storing refined palm oil, crude palm oil? Held that:- The said issue has been considered in the case of Thiru Arooran Sugars [2017 (7) TMI 524 - MADRAS HIGH COURT], where the Hon’ble High Court of Madras has held that the credit on such items used for manufacture of capital goods is eligible - credit allowed - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 1654
Classification of goods - Herbal Sheekakai Powder and Herbal Reetha Powder with the brand name Meera - whether Herbal Sheekakai Powder merits classification under Chapter 30 as medicaments or under Chapter 33 as preparations for use on the head ? Held that:- As per the relevant Chapter Notes, Chapter Note 1 (d) of Chapter 30 'excludes preparations of Chapter 33 even if they have therapeutic and prophylactic properties'. Secondly, Chapter Note 2 to Chapter 33 states that Chapter Sub-Heading 33.03 to 33.07 apply inter alia to products suitable for use as goods of these headings and put up in packings with labels, literature or other indications that they are for use as cosmetics or other toilet preparations or put up in a form clearly specialized for such use and includes products whether or not they contain subsidiary pharmaceutical or antiseptic constituents or are held out as having subsidiary curative or prophylactic value . In the present case, there is no evidence put forward by the respondent that the impugned products are sold in the market as medicines. Further, it is also seen that the said products are advertised in TV as well as other media as preparations used on the hair and also understood by public as toiletry requisite only. The Supreme Court in the recent judgment in the case of Commissioner of Central Excise, Mumbai Vs. M/s. CIENS Laboratories, Mumbai [2013 (8) TMI 467 - SUPREME COURT] has held that for an ayurvedic medicine to be classified under Chapter 33 has to pass the test whether it is for cure of any disease. If the same is only meant for care, then such product would not fall under medicament. It is obvious that the product manufactured is for care of the hair, even though, it may have subsidiary medicinal properties - product rightly classified under CETH 3305.99 - appeal dismissed - decided against Revenue.
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2018 (9) TMI 1653
CENVAT Credit - credit availed on the basis of the invoices issued by their corporate office at Kolkata and their sales branch Mumbai in the capacity as Input Service Distributor - reversal order on the ground that the appellant has not distributed the credit proportionately to all the units. Held that:- The said issue is decided in the case of COMMISSIONER OF CENTRAL EXCISE VERSUS DASHION LTD [2016 (2) TMI 183 - GUJARAT HIGH COURT], where it was held that There is nothing in the said Rules of 2005 or in the Rules of 2004 which would automatically and without any additional reasons dis-entitle an input service distributor from availing Cenvat credit unless and until such registration was applied and granted. Demand do not sustain - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 1652
Irregular availment of CENVAT credit - utilization of such credit on inputs and input services in the manufacture of first clearance of craft paper - Held that:- The issue decided in the case of M/S. SRIPATHI PAPER & BOARDS VERSUS CCE & ST, TIRUNELVELI [2018 (9) TMI 891 - CESTAT CHENNAI], where it was held 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 - appeal allowed - decided in favor of appellant.
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2018 (9) TMI 1651
Rectification of Mistake - case of applicant is that the benefit of DTA sale and Notification No. 23/2003-CE has been denied on the ground that the LOP mentioned these two by-products and there is no necessity for demarcation of by-products and that by such demarcation, the obligation case on the appellant could not be waived as these are not waste and scrap. That such finding is contradictory in nature - Held that:- An application for rectification is by no means an appeal in disguise whereby an appeal can be reheard or decided. The ROM application is only for mistake which are patent. An error apparent on face of record means an error which is apparent on mere looking and does not require long drawn process of reasoning of points where there may be conceivable two opinions. Such error should not require any extraneous matter to show its incorrectness. The contentions put forward are not errors apparent on face of record which requires rectification - ROM Application dismissed.
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2018 (9) TMI 1650
Classification of goods - Red Mud collected as a residue - whether classified as product classifiable under heading 26219000 of CET Act, 1985 or otherwise? - Held that:- This issue is no more res integra as the same is covered by the decision of this very Bench in the appellant’s own cases M/S. THE MADRAS ALUMINIUM COMPANY LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM [2017 (12) TMI 1610 - CESTAT CHENNAI] for earlier periods wherein the Bench has held in favor of the appellants - Appeal allowed - decided in favor of appellant.
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2018 (9) TMI 1649
CENVAT Credit - certain capital goods used for the construction of various turnkey projects - Held that:- This Bench of the Tribunal, in the assessee’s own case M/S. TAMILNADU NEWSPRINT & PAPERS LTD. VERSUS CCE, TRICHY [2014 (7) TMI 1281 - CESTAT CHENNAI] for different periods has set aside and allowed the appeal by way of remand to the file of adjudicating authority, wherein an identical issue was involved - By following the same, it is deemed proper to set aside the impugned order and remit the matter back to the file of the adjudicating authority to pass a fresh order in accordance with law - appeal allowed by way of remand.
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Indian Laws
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2018 (9) TMI 1705
Legal propriety and correctness of the award made by the Arbitrators in favour of the respondents - Section 34 of the Arbitration and Conciliation Act, 1996 - determination of seat/vanue of arbitration - Maintainability of the application under Section 34 of the Act - Whether Arbitration Clause ousts the jurisdiction of the courts in India? Held that:- The arbitration clause has to be appositely read to understand its intention so as to arrive at a conclusion on whether it determines the seat or not - there is no confusion with regard to what the seat of arbitration and venue of arbitration mean. There is no shadow of doubt that the arbitration clause has to be read in a holistic manner so as to determine the jurisdiction of the Court. That apart, if there is mention of venue and something else is appended thereto, depending on the nature of the prescription, the Court can come to a conclusion that there is implied exclusion of Part I of the Act. On a perusal of Articles 20 and 31(3) of the UNCITRAL Model Laws, we find that the parties are free to agree on the place of arbitration. Once the said consent is given in the arbitration clause or it is interpretably deduced from the clause and the other concomitant factors like about the venue and something in addition by which the seat of arbitration is determinable. The other mode, as Article 20 of the UNCITRAL Model Law provides, is that where the parties do not agree on the place of arbitration, the same shall be determined by the Arbitral Tribunal. Such a power of adjudication has been conferred on the Arbitral Tribunal. Article 31(3) clearly stipulates that the Award shall state the date and the place of arbitration as determined in accordance with Article 20(1). In the present case, the place of arbitration was to be agreed upon between the parties. It had not been agreed upon ; and in case of failure of agreement, the Arbitral Tribunal is required to determine the same taking into consideration the convenience of the parties. It is also incumbent on the Arbitral Tribunal that the determination shall be clearly stated in the “form and contents of award” that is postulated in Article 31. There has been no determination - the word “determination” requires a positive act to be done. In the case at hand, the only aspect that has been highlighted by Mr. C.U. Singh, learned senior counsel, is that the arbitrator held the meeting at Kuala Lumpur and signed the award. That, in our considered opinion, does not amount to determination. The word “determination” has to be contextually determined. When a “place” is agreed upon, it gets the status of seat which means the juridical seat. We have already noted that the terms “place” and “seat” are used interchangeably. When only the term “place” is stated or mentioned and no other condition is postulated, it is equivalent to “seat” and that finalises the facet of jurisdiction. But if a condition precedent is attached to the term “place”, the said condition has to be satisfied so that the place can become equivalent to seat. In the instant case, as there are two distinct and disjunct riders, either of them have to be satisfied to become a place. As is evident, there is no agreement. As far as determination is concerned, there has been no determination - Thus understood, Kuala Lumpur is not the seat or place of arbitration and the interchangeable use will not apply in stricto sensu. The irresistible conclusion is that the Courts in India have jurisdiction and, therefore, the order passed by the Delhi High Court is set aside - appeal is allowed - High Court is requested to deal with the application preferred under Section 34 of the Act as expeditiously as possible.
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