CASE LAWS
2019-TIOL-313-HC-MAD-CUS
HIGH RANGE SPICES Vs CC: MADRAS HIGH COURT (Dated: February 01, 2019)
Cus - The assessee imported Spices & other goods - During the relevant period, it raised an invoice for importing Black Pepper from Sri Lanka - The landing of the goods & the filing of Bill of Entry occurred on the same date - The Revenue opined that importing Black Pepper is prohibited as per Notfn No 53/2015-2020 - It further opined that though the DGFT had permitted import of the same, it was subject to the CIF per Kg being above Rs 500/- per Kg - While the CIF was above Rs 500/- on the date of raising invoice for import, the CIF value declined to below Rs 500/- on the date of landing of the goods & filing Bill of Entry, due to fluctuations in USD value - Hence the Revenue declined to clear the goods - Thus the present writ.
Held - The Notfn No 53/2015-2020 issued by the DGFT lays down the policy as to whether import of certain item is free or prohibited - This cannot be decided after the imported goods lands in India as there must be certainty in such transactions - Hence the position that prevails of the date of raising of invoice along will be the basis for determination - Though the rate of duty will be determined as per date of filing of Bill of Entry, the issue as to whether the import is free or prohibited, must be decided based on situation prevalent on date of placing of order or raising of invoice - Thus in this case, the import must be considered to be free, since the CIF value was above Rs 500/- as on date of raising invoice - The goods be released after fulfiling relevant formalities: HC (Para 2,7,8)
Assessee's writ petition allowed
2019-TIOL-312-HC-MUM-IT + Case Story
SADHANA R JAIN Vs CBDT: BOMBAY HIGH COURT (Dated: January 29, 2019)
Income tax - Writ - Section 119(2) - CBDT Circular dated Mar 28, 2017
Keywords - condonation of delay - default in payment of tax - extra relaxation under IDS scheme - personal reasons
The assessee is an individual. During the relevant year under consideration, she had applied to the competent authority on Sep 28, 2016 by making necessary declaration under the Income Declaration Scheme of 2016. In terms of such declaration, the assessee had to deposit a minimum 25% of the total sums payable pursuant to such declaration, latest by Nov 30, 2016. The total tax payable by assessee on such declaration was Rs.17,40,855/- along with surcharge & penalty of Rs.4,35,213/-. The assessee therefore, on Dec 12, 2016 conveyed to the CBDT that due to medical complications and unavoidable circumstances, she could not deposit the first installment within the time permitted. She therefore, requested for condonation of delay and pleaded that in absence of condonation, her declaration would be treated as invalid/ void resulting into genuine hardship to her. She also stated that she was in a position to make the payment within first week of December, 2016 itself. Since there was no response to this application by the CBDT, the assessee approached this Court. Thereafter, pursuent to the directions of this Court, the CBDT passed an order rejecting the application of assessee for condonation. This was on the ground that IDS was the opportunity provided by the Government to noncompliant tax payers to come clean after paying tax at the higher rate, and granting any further relaxation under the IDS, would de-motivate the honest tax payers who were paying taxes promptly.
On Writ, the HC held that,
Whether when Legislature has framed a special Scheme giving certain concession to the Assessees who had till then not declared their incomes truly & fully, it can always lay down limits of such concession - YES: HC
Whether declarant under Income Declaration Scheme can seek condonation of delay while paying installments of his undisclosed income, if reasons for condonation are attributable to him - NO: HC
++ it is seen that the IDS was framed by the legislature by incorporating Chapter IX in Finance Act, 2016. The provisions of this Chapter enabled the Assessees who had undisclosed income, to make a declaration. Broadly stated, the Scheme provided that upon such a declaration being accepted, the declearant would pay tax with surcharge and penalty at prescribed rates in three installments. Upon payment of such sums, the Assessee would receive certain immunities. It is true that unlike the earlier Schemes, making similar provisions, Section 195 of the Finance Act, 2016 contained a provision, clarifying that, besides others, the applicability of Section 119 was specifically retained in relation to the provisions of the Scheme. It was in this context that the CBDT had issued its Circular dated Mar 28, 2017. Such Circular aimed to obviate certain difficulties faced by the Assesses in depositing first installment. Circular provided for accepting late payment of the first installment in cases where the remittance was made through cheque, RTGS and electronic transfer etc before Nov 30, 2016 but the same was to be credited by the Bank before Dec 05, 2016. Thus, the CBDT recognized the limited area where though the payment was made within time, but the bank had not credited the same in the Government revenue. Under such circumstances, the time would be relaxed in favour of the declarant. While doing so, the CBDT also considered the cases of individual hardship for reasons such as personal reasons or emergency reasons, lack of liquidity etc. The board, however, took a conscious decision not to grant any extension in such situations;
++ from perusal of the Board's Circular, it would clearly emerge that while providing for a limited window, in cases where payments were made through banking channels but the deposit was made by the bank in the Government revenue few days after Nov 30, 2016 to condone the delay in such circumstances, no relaxation was granted in other cases, particularly involving individual reasons, which can be attributable to the declarants. Therefore, the decision of the Board is well within the four corners of the Circular. The IDS itself did not make any provisions for relaxation. The Scheme did retain the power of Board u/s 119(2) and in exercise of such powers, the Board has laid down the areas where relaxation would be granted and consciously decided not to grant extension or condone delay in cases where reasons were attributable to the declarants. The CBDT Circular dated Mar 28, 2017, therefore, cannot be treated as the decision of the Board abdicating its power u/s 119(2). In any case, when the legislature frames a special Scheme giving certain concession to the Assesses who had till then not declared their incomes truly and fully, legislature can always lay down its limits of the concession to be granted.
Assessee's petition dismissed
2019-TIOL-311-HC-MUM-IT
PUSHKAR PRABHAT CHANDRA JAIN Vs UoI: BOMBAY HIGH COURT (Dated: January 30, 2019)
Income Tax - Section 205
Keywords - Attachment - Bank account - Non-deposit of TDS.
The individual assessee sold an immovable property for which the purchasers made a payment after deducting tax at source. The assessee filed the return and claimed the refund of TDS. The Revenue noted that the deductors did not deposite the TDS amount. Under the circumstances, the petitioner was asked to pay the said sum again, since the Reevenue rejected to recognized the TDS credit in favour of the assessee. Subsequently, the return was taken in limited scrutiny on specific three grounds which did not include the question of TDS mismatch. During the pendency of such scrutiny assessment, the Revenue issued a notice addressed to the Branch Manager of the SBi attaching the bank account of the assessee for recovery. Thereafter, the Revenue withdrew a partial sum from the assessee's said bank account on two occasions for recovery of the unpaid amount. The assessee objected to the attachment of the bank account which was rejected.
On hearing the petition, the High Court held that,
Whether if the payer fails to deposit TDS amount with the Revenue after collecting it, the Income Tax Act mandates the collection of amount from the deductor and not from the deductee - YES: HC
++ section 205 carries the caption "Bar against direct demand on assessee" and provides that where tax is deducted at the source under the provisions of Chapter XVII, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income. This provision came up for consideration before division bench of Court in case of Yashpal Sahni Vs. Rekha Hajarnavis and ors. which was adjudged in favour of the assessee. In the instant case too, the Revenue does not contend that the assessee did not suffer TDS at the hands of payer, but contends that the same has not been deposited with the Government revenue. As provided u/s 205, under such circumstances the assessee cannot be asked to pay the same again. It is always open for the Revenue to resort to sufficient provisions of the Act of 1961 to make coercive recovery of such unpaid tax from the payer whose primary responsibility is to deposit the same with the Government revenue scrupulously and promptly. If the payer after deducting the tax fails to deposit it in the Government revenue, measures can always be initiated against such payers.
Assessee's Petition Partly Allowed
2019-TIOL-310-HC-MUM-IT
PR CIT Vs SOLAPUR DISTRICT CENTRAL COOPERATIVE BANK LTD: BOMBAY HIGH COURT (Dated: January 30, 2019)
Income tax - Section 43D
Keywords - accrued income - overdue interest reserve - interest on NPAs
The assessee is a co-operative Bank. It had filed the return declaring loss of Rs.34.11 Crores. During the course of assessment, the AO noticed that the assessee Bank had transferred an amount of Rs.7.80 Crores to Overdue Interest Reserve by debiting the interest received in P&L A/c. The AO was of the opinion that, Assessee Bank had to offer the interest due to tax on accrual basis. He referred to the provisions of Sections 145 & 43D and rejected the explanation of assessee that, the RBI guidelines provide that income on NPAs was not be credited to P&L A/c but instead to be shown as receivable in the balance sheet. The assessee pointed out that, in this manner, only the interest received during year was credited to P&L A/c and offered to tax. The AO however, discarded the explanations of assessee, principally on basis of accrual of interest income.
On appeal, the Tribunal reversed the decisions of the Revenue Authorities, relying upon the principle of real income theory and referring to the decision of Supreme Court in case of CIT v/s. Shoorji Vallabahdas & Co - 2002-TIOL-947-SC-IT.
On appeal, the HC held that,
Whether laws finally settled by the Apex Court need no further interference by High Courts - YES: HC
Whether interest on NPAs transferred to Overdue Interest Reserve, should be taxed on receipt basis only but not accrual basis - YES: HC
++ it is seen that the Gujarat High Court in case of Pr. CIT v/s. Shri Mahila Sewa Sahakari Bank Ltd - 2016-TIOL-1729-HC-AHM-IT had undertaken the detailed exercises to examine an identical situation, and held that, the Cooperative Banks were acting under the directives of the Reserve Bank of India with regard to the prudential norms set out. The Court was of the opinion that, taxing interest on NPA cannot be justified on the real income theory. This decision was carried in appeal by the Revenue to the Supreme Court, but was dismissed. Thus, the Supreme Court can be seen to have approved the decision of Mahila Sewa Sahakari Bank Ltd. Therefore, there is no reason to entertain these appeals;
++ it is also noticed that subsequently, legislature has amended Section 43D. Clause (g) was inserted in the Explanation toSection 43D by Finance Act, 2016, which provides that for the purpose of such Section, Cooperative Banks, Primary Agricultural Credit Society and Primary Agricultural and Rural Development Bank shall have meanings respectively assigned in Explanation to subsection 4 of Section 80B. By virtue of such insertion, the Cooperative Banks would get the benefit of 43D. One way of looking at this amendment, can be that, the same is curative in nature and would, therefore, apply to pending proceedings, notwithstanding the fact that, the legislature has not made the provision retrospective.
Revenue's appeal dismissed
2019-TIOL-309-HC-MUM-IT
PR CIT Vs UTV SOFTWARE COMMUNICATION LTD: BOMBAY HIGH COURT (Dated: January 29, 2019)
Income tax - Sections 2(42C) & 50B
Keywords - slump sale of undertaking - capital gain - transfer of shares
The Revenue Department preferred the present appeal challenging the action of ITAT in holding that the transaction between assessee and M/s. Media Footing Sdn Bhd., was that of share transfer and not the one of slump sale, without appreciating that the said transaction between the assessee and MFSB squarely met the criteria of slump sale as laid down u/s 2(42C) and thereby the Capital Gain accrued thereon should be governed by the provisions of Section 50B.
On appeal, the HC held that,
Whether transfer of shares in a company or change in shareholding pattern, would result in 'transfer of an undertaking' to make it a 'slump sale' - NO: HC
++ the order of the Tribunal has allowed the assessee's appeal by following its order in case of same assessee for the assessment year 2007-08. Thereafter, the Revenue has come up in the appeal from the order of Tribunal being Income Tax Appeal No. 1475 of 2016 in Pr. CIT Vs UTV Software Communication Ltd. This appeal was considered and by separate order, came to be dismissed as not giving rise to any substantial question of law. It is an agreed position between the parties that the facts and law as applicable to the subject assessment year is not materially different from the facts and laws as were available for the assessment year 2007-08. Therefore, for the reasons indicated in Income Tax Appeal No. 1475 of 2016, the question as proposed herein also does not give rise to any substantial question of law.
Revenue's appeal dismissed
2019-TIOL-308-HC-MUM-IT
NIELSEN INDIA PVT LTD Vs DCIT: BOMBAY HIGH COURT (Dated: January 31, 2019)
Income Tax - Section 147
The assessee company filed its return which was subsequently revised. In such return, the assessee had removed a certain amount in the profit and loss account towards payment of fees as per the Global Service Agreement. It was submitted in this regard that such payment was made initially on estimation basis and subsequently upon finalization of accounts, it was adjusted in the books by making reversal entry. During the scrutiny assessment, with respect to such payment, the question of TDS came up for consideration before the AO. To the extent, the assessee had failed to deduct tax at source, the expenditure was disallowed and assessment order was passed. Subsequently, the AO recorded that the assessee had debited the profit and loss account by an amount of Rs. 8.84 crore on account of Global Service Agreement. This amount represents a net sum after reversal of expenditure of Rs. 4.65 crore. The assessee had accounted for only such sum of Rs. 8.84 crore for deduction of tax at source and no tax at source was deducted on the additional sum of Rs. 4.65 crore. According to the Assessing Officer, the assessee could have claimed reversal of the expenditure pertaining to earlier arrears only if the amount was disallowed in the relevant years. The AO issued the notice of reopening to which the assessee raised objections which were rejected by the AO.
On hearing the petition, the High Court held that,
Whether notice for reopening fails if it does not demonstrate any failure of the assessee to disclose truly and fully all material facts - YES: HC
++ the notice has been issued beyond the period of four years from the end of relevant AY. The requirement that the income chargeable to tax has escaped assessment due to the failure on the part of the assessee to disclose truly and fully all material facts flowing from first proviso to Section 147, therefore, needs to be satisfied. In the present case, the AO has recorded reasons which neither state nor demonstrate that there was any failure on the part of the assessee to disclose truly and fully all material facts;
Whether when the AO had ample opportunity to examine the genuineness of expenditures during the scrutiny assessment, it can later become the reason for issuance of notice of reopening - NO: HC
++ there is one more reason why the notice cannot be sustained. The reason is that the AO had occasion to examine the entire transaction during the scrutiny assessment. Apart from there being no failure on the part of the assessee to disclose truly and fully all material facts, there was scrutiny of the assessee's expenditure. After raising queries and eliciting response from the assessee, the AO had passed the order of assessment making limited disallowance. On both these grounds i.e non failure to disclose true and full material facts and change of opinion, the notice must be quashed.
Assessee's Petition Allowed
2019-TIOL-307-HC-MUM-IT
PR CIT Vs MAHALAXMI INFRA PROJECTS LTD: BOMBAY HIGH COURT (Dated: January 30, 2019)
Income tax - Section 41
Keywords - bogus claim - cessation of liability - depreciation on civil construction - outstanding labour expenses
The Revenue Department preferred the present appeals challenging the action of ITAT in deleting the addition made by AO u/s 41(1) on account of bogus claim of expenses in the name of labour contractors / subcontractors which were outstanding for a number of years.
The Department also challenged the action of Tribunal in allowing depreciation @80% on civil construction, electrical and other non-integral installations.
On appeal, the HC held that,
Whether an outsanding debt which is continuing for years, will by itself amount to cessation of such liability - NO: HC
++ as far as bogus expenses is concerned, the same arises out of the additions made by AO u/s 41(1) on account of bogus claim of liability. The Tribunal while giving relief to the assessee, referred to the decision of Supreme Court holding that merely because period of three years expired from arising of the liability, would not automatically mean that the liability has ceased. There is no error in this view of the Tribunal;
Whether civil construction that forms integral part in the installation of the windmill, are eligible for depreciation as well - YES: HC
++ as far as the Revenue's objection to the assessee claiming higher rate of depreciation on the civil construction, electric and other installations by the assessee in the process of erecting and installing windmill, the Department argues that the expenditure in such activities cannot be seen as a part of installation of windmill and, therefore, the depreciation prescribed for the same would not be available to the assessee. It is however noticed that a similar question had come up for consideration before this Court in Income Tax Appeal No.1326 of 2010, wherein it was observed that the finding recorded by the Tribunal that RCC foundation forms integral part of the windmill is a finding of fact and no question of law arises from the same. In the result, these questions are not entertained.
Revenue's appeal dismissed
2019-TIOL-306-HC-MUM-IT
MOHANLAL CHAMPALAL JAIN Vs ITO: BOMBAY HIGH COURT (Dated: January 31, 2019)
Income tax - Writ - Sections 147 & 148
Keywords - commodity exchange - escaped income - reasons for reopening
The assessee is a senior citizen. During the relevant year under consideration, the assessee had traded in Commodity Exchange. On the premise that he had no taxable income, the assessee did not file his return for the said assessment year. The AO however, was of the opinion that the assessee had entered into franchises of Rs. 18.82 crore in Commodity Exchange. He further noticed that the assessee had not filed his return and therefore, he had reason to believe that income chargeable tax tax had escaped assessment. Accordingly, he issued notices u/s 148 to re-assess the assessee's income chargeable to tax.
On Writ, the HC held that,
Whether AO is permitted to reopen assessment solely on the basis of fishing inquiries, without even verifying at least prima facie that income in the hands of assessee chargeable to tax had escaped assessment - NO: HC
++ it is seen that the AO has proceeded on a wrong premise that even when called upon to state why the assessee had not filed his return, he had not responded to the said query. The assessee did communicate to the Department that he had no taxable income and therefore, there was no requirement to file the return. The AO did not carry out any further inquiry before issuing the reopening notice. In the reasons, one more error pointed out by the assessee is that the AO referred to the sum of Rs. 18.82 crore as total transaction in the commodities. In the petition as well as in the objections raised before the AO, the assessee pointed out that his sales were to the tune of Rs. 16.82 crore against purchases of 16.84 crore and thereby, he had actually suffered a loss. The AO has not discarded these assertions;
++ importantly, if the AO had access to the assessee's sales in commodities, he could as well have gathered the information of his purchases. Either on his own or by calling upon the assessee to provide such details, the AO could and ought to have verified at least prima facie that the income in the hands of assessee chargeable to tax had escaped assessment. In the present case, what the AO aiming to do so is to carry out fishing inquiry. In fact, even when the assessee brought such facts and figures to his notice, the AO refused to look into it.
Assessee's petition allowed
2019-TIOL-305-HC-DEL-IT
PR CIT Vs ADITYA DUROBUILD PVT LTD: DELHI HIGH COURT (Dated: January 23, 2019)
Income tax - Sections 80AC, 80IB & 139(1)
Keywords - belated claim - due date of filing return - intimation to Revenue
The assessee company had filed its return for the relevant year declaring Rs. 50,48,310/-. The assessee also claimed deduction of Rs. 2,44,91,385/- u/s 80IB, however only after the due date for filing the returns. Subsequently, in the block assessment proceeding which ensued pursuant to search conducted in the premises of assessee, the AO determined that the total tax payable was Rs. 57,21,877/-. On appeal, the returned income was accepted by the CIT(A), after observing that the deduction u/s 80IB had been allowed in the previous two A.Ys and that the necessary documents were furnished in support of the claim. Not satisfied, the Revenue’s approached the ITAT, but in vain.
On appeal, the HC held that,
Whether Appellate Revenue Authorities are precluded from granting relief on belated claims of assessee made after due date, simply because assessee had not received intimation u/s 143(1), when the AO himself has accepted such deduction - NO: HC
++ the Revenue contends that the findings of the ITAT are in error on two aspects: one, that by the mandate of Sections 139(1) r/w/s 80AC, the belated claim for deduction u/s 80IB by the assessee in the return in the first instance precluded the relief and consequently that the CIT(A) could not have granted the relief in an alleged grievance that the assessee had not in fact received the intimation u/s 143(1). A consideration of the orders of lower appellate authorities clearly discloses that even the AO, after considering the grounds urged by the assessee in the return filed by it pursuant to the search and seizure, accepted the deduction claim. In these circumstances, the acceptance of that deduction, however, in the appeal by the CIT(A), even upon an erroneous presumption that an intimation was not generated to the assessee at the relevant time, is of no consequence. Furthermore, all the Revenue authorities examined the deduction claim on merits and it was noticed that for the previous years as well similar benefits had been granted. Given these circumstances, the Court is of the opinion that no substantial question of law arises.
Revenue's appeal dismissed
2019-TIOL-304-HC-KOL-IT
CIT Vs ANANDA BAZAR PATRIKA PVT LTD: CALCUTTA HIGH COURT (Dated: January 31, 2019)
Income tax - Section 32(1)(iia)
Keywords - additional depreciation - absence of reasons - installation of asset
The Revenue Department preferred the present appeal challening the action of ITAT in failing to consider that additional depreciation was introduced by Finance Act, 2002 and it was to be allowed only if assets were acquired and installed after April 01, 2002. Therefore, it was pointed out that the additional depreciation of Rs.5,61,23,019/- was wrongly allowed by the AO, as the assessee although purchased the assets before April 01, 2002 but the assets were admittedly installed after such date.
On appeal, the HC held that,
Whether where evidence is cited in support of proof of a fact, then the exact materials on which such inference is being drawn have to be specified - YES: HC
Whether absence of reasons on a factual issue in the order of the Tribunal which is the final authority on facts, is itself a substantial question warranting writ interference - YES: HC
++ according to the CIT, the additional depreciation of Rs.5,61,23,019/- was wrongly allowed to the assessee. The machines according to her were purchased before 31st March, 2002 but installed after 31st March, 2002. The appeal went to the Tribunal, wherein it was decided that the observation of CIT is without rebutting the evidences and documents placed on record by the assessee whereas the AO has allowed the claim of assessee after perusing the relevant documents and evidences placed by the assessee before him and thereafter accepted the claim of assessee. The reasons sought to be advanced by the Tribunal, regrettably show absolute non-application of mind;
++ where evidence is cited in support of proof of a fact, the exact materials on which such inference is being drawn have to be specified. After all, the Tribunal is the final fact finding authority. Saying "all the documents will be found in the paper book" amounts to dealing with the matter very cursorily. The factum of sale/acquisition of the machines has to be proved legally in terms of payment of consideration, date of delivery, passing of property, the terms and conditions of contract etc. The installation of the assets has also to be established in a like manner. In the opinion of this Court, such absence of reasons on a factual issue in the order of the Tribunal which is the final authority on facts is itself a substantial question of law from which an appeal lies to the High Court u/s 260A. That part of the order of the Tribunal dealing with additional depreciation is set aside.
Case remanded
2019-TIOL-424-CESTAT-MUM
TAPI PRESTRESSED PRODUCTS LTD Vs CCE & C: MUMBAI CESTAT (Dated: January 17, 2019)
CX - Valuation - Section 4 of the CEA, 1944 - Appellant, a manufacturer of pipes, is also engaged in erection and installation of lift irrigation systems in pursuance of which manufactured pipes are transported to the site of the customer for assembly - Jurisdictional authorities issued demand for differential CE duty by adding the transportation costs incurred for such movement - demand confirmed along with imposition of penalty u/s 11AC and interest - Commissioner(A) upheld the demand, hence appeal to CESTAT.
Held: Inclusion of transport cost beyond the factory of manufacture is allowed only upon establishing that the manufacturer continues to be the owner of the goods even at the site of assembly - Contract requires that the appellant assemble the goods in accordance with the pre-arranged design in a separate transaction in which the goods supplied cannot be rejected by the procurement agency - therefore, there is no reason to accept the contention of the Revenue that the sale has occurred at the premises of the buyer - following the apex court decision in Ispat Industries - 2015-TIOL-238-SC-CX, transportation costs are not liable to be included in the AV of the excisable goods - impugned order set aside and appeals allowed: CESTAT [para 6, 7]
Appeals allowed
2019-TIOL-423-CESTAT-MUM
VISHAL TRADERS Vs CCE: MUMBAI CESTAT (Dated: January 08, 2019)
ST - Activity of the appellant as intermediary between M/s Kudremukh Iron Ore Co. Ltd. and the buyer of ‘pig iron' was admitted in SCN to be classified as ‘clearing and forwarding agency service' and liable to tax - original authority has confirmed the demand for acting as ‘commission agent' that finds enumeration within the definition of Business Auxiliary service - straddling of the intermediary between two different services is indicative of the difficulties in specifying the object of taxation - in the circumstances and in the absence of any evidence or suppression or mis-declaration on the part of the appellant, ingredients for invoking section 78 of FA, 1994 for imposition of penalty do not exist - penalty imposed u/s 78 set aside and appeal allowed to this limited extent: CESTAT [para 4, 5]
Appeal partly allowed
2019-TIOL-422-CESTAT-MAD
INDIAN OIL CORPORATION LTD Vs CGST & CE: CHENNAI CESTAT (Dated: December 04, 2018)
ST - The assessee, a public sector undertaking provided the facility of storage to M/s IBP Co. Ltd. and received consideration for the services provided under Storage and Warehousing services, on which service tax was discharged - Later, M/s IBP Co. Ltd was amalgamated with the appellant's organization - Thus, the appellant filed a refund claim seeking refund of service tax paid on storage and warehousing services for the relevant period - The appellant stated that, since both the entities have become a single entity, there was no service provided and, therefore, no liability to pay service tax - However, the original authority rejected the refund claim on the ground of time bar and unjust enrichment - On appeal, the Commissioner(A) upheld the order of original authority.
Held - It is seen that the appointed date for the amalgamation to take effect was 1.4.2004 - Thus, if an order of amalgamation is passed by any High Court, the assessee would be able to file the refund claim only after such order comes within their knowledge - Accordingly, in the present case, the assessee filed the refund claim within one year after receiving the order or after coming to know about the amalgamation, therefore, not being time barred - Further, the Doctrine of Unjust Enrichment does not apply to the State (PSU) and, therefore, it cannot pass the burden to any other person - Thus, in the present case, the rejection of refund claim was not hit by unjust enrichment - In total rejection of refund is unjustified and so the order of original authority is set aside: CESTAT (Para 5.1 & 6).
Assessee's appeal allowed
2019-TIOL-421-CESTAT-MAD
JET AIRWAYS INDIA LTD Vs PR CC: CHENNAI CESTAT (Dated: October 25, 2018)
Cus - The assessee-company is a leading airline operator - During the relevant period, it uplifted ATF from foreign destinations for the return journey to India - The Department opined that Customs duty was payable based on assessable value worked out - It also sought to include the value of freight, insurance & landing charges in such assessable value - Hence duty demands were raised with interest - Penalties were imposed u/s 112(a) & 114A in orders passed for various periods, on grounds that the assessee indulged in suppression & mis-statement of facts.
Held - The validity of adding freight, insurance or landing charges to the cost of ATF has been settled by the Tribunal in Interglobe Aviation Ltd. Vs CC New Delhi wherein it was held that fuel in the tank of aircraft used for propulsion cannot be considered as cargo or goods with attributable cost of freight - It was also relied on the Apex Court's decision in Wipro Ltd. wherein it was held that when the actual cost towards handling charges are available, notional addition is not legally tenable & the same was violative of Article 14 of the Constitution - Hence following the findings in Interglobe Aviation Ltd. Vs CC New Delhi the demands raised in the present cases are untenable & merit being set aside - Moreover, the penalties must be quashed too since no grounds for imposing them have been provided: CESTAT (Para 2-5,8.1,8.5)
Assessee's appeals allowed
2019-TIOL-420-CESTAT-HYD
BHARTI AIRTEL LTD Vs CCE, C & ST: HYDERABAD (Dated: January 01, 2019)
ST - The assessee-company is engaged in providing telecom services - Thus, the assessee claimed CENVAT Credit of central Excise duty paid on capital goods like equipments/modules, channels, angles and shelters which were used by it in the output services provided - However, the adjudicating authority rejected the contentions of the assessee & raised duty demands by invoking the extended period of limitation.
Held - It is seen that the demand for the relevant period was raised by invoking the extended period - Moreover, the adjudicating authority in the Order-in-Original had stated that the assessee had been filing the ST-3 returns but did not give the required information, and stated there was no information regarding availment of CENVAT Credit on angles, channels and beams and pre fabricated buildings - Therefore, during the relevant period, as there were different views expressed by the adjudicating authority as well as the Tribunal, the appellant could have entertained a bona fide belief as to eligibility to avail CENVAT Credit - Accordingly, the order is set aside only on the ground of limitation: CESTAT (Para 4 & 5)
Assessee appeal allowed
