2018-TIOL-NEWS-021, Dated: Wednesday, January 24, 2018

2018-TIOL-NEWS-021 | Wednesday January 24, 2018

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DIRECT TAX


	2018-TIOL-28-SC-IT CIT Vs Ranbaxy Laboratories Ltd Having heard the parties, the Supreme Court condoned the delay and issued notices to respective parties directing their appearences for further hearing on the issue of jurisdictional validity of reassessment proceedings. - Notice issued: SUPREME COURT OF INDIA 2018-TIOL-147-HC-DEL-IT + Story Vikram Singh Vs UoI Whether in a case of wilful non-payment of tax for a long period, assessee deserves any sympathy if compounding fees turn out to be more than the princpal - NO: HC Whether when the assessee opts for the compounding option only to escape punishment for a criminal offence u/s 276C, the principle of proportionality does not apply in such cases - YES: HC Whether when the assesse has opted for the compounding option only to escape the criminal charges it is free to raise objections about exorbitant fees and unreasonable guidelines - NO: HC - Writ Petition disposed of : DELHI HIGH COURT 2018-TIOL-146-HC-AHM-IT CIT Vs Ranbaxy Laboratories Ltd Whether AO has jurisdiction to reassess issues other than those in respect of which proceedings are initiated, if he reasons for initiation of those proceedings ceased to survive - NO: HC - Revenue's appeal dismissed : GUJARAT HIGH COURT 2018-TIOL-141-ITAT-DEL + Story Subodh Gupta (Huf) Vs PR CIT Whether the PCIT holds jurisdiction to rectify the assessment order passed by the AO with respect to the taxability of gift even if notice has been issued u/s 154 on similar issue - YES: ITAT Whether the term 'relative' defined u/s 56(2)(vii) with regard to an individual can be considered when the recipient of the property/gift is an HUF - NO: ITAT Whether therefore, gift received from non-member of HUF does not amount to gift from 'relative' and therefore, chargeable to tax u/s 56(2)(vii) - YES: ITAT Whether when specific rule in order to determine the 'FMV' for section 56 is already been notified, computation of the same to be follow and not as defined u/s 2(22B) - YES: ITAT - Case Remanded: DELHI ITAT 2018-TIOL-140-ITAT-MUM ACIT Vs Late Shri Manojkumar S Gupta Whether when AO makes disallowance at the rate of 10 % of bogus purchase, whereas normal rate adopted by the Revenue in such cases is 12.50 %, the CIT(A) is not justified in restricting the same to 7.54 %, without any reasoning - YES : ITAT Whether when assessee produced books of accounts and confirmation from dealer, who is not an unknown party, addition made treating the transactions from such party as unexplained cash credit u/s 68 of the Act, is not sustainable - YES : ITAT - Revenue's appeal partly allowed: MUMBAI ITAT 2018-TIOL-139-ITAT-KOL DCIT Vs Balmer Lawrie And Company Ltd Whether when AO while completing original assessment proceedings did not make any reference to the queries answered by assessee and had made no addition to its income, he cannot claim later on that such queries were missed his attention, for purpose of initiating reopening - YES: ITAT - Revenue's appeal dismissed: KOLKATA ITAT 2018-TIOL-138-ITAT-AHM Bombardier Transportation India Pvt Ltd Vs DCIT Whether when recipient of fees is wholly responsible for handling / providing all information technology related services, then services provided by it will amount to technical services requiring TDS deduction u/s 194J - YES: ITAT - Assessee's appeal dismissed: AHMEDABAD ITAT 2018-TIOL-137-ITAT-HYD Pallavi Educational Society Vs ADIT Whether exemption u/s 11 can be denied to a trust, merely because it has given advances to another concern in which one of its trustee was having substantial interest, when such lending inhibits no commercial intention and it is the usual practise of the trust to take advances & lend money in quid-pro-quo - NO: ITAT Whether depreciation if allowed to be reduced from income of trust, for determining percentage of funds which had to be applied for purposes of trust, will amount to double deduction - NO: ITAT - Assessee's appeal allowed: HYDERABAD ITAT

INDIRECT TAX

SERVICE TAX SECTION

2018-TIOL-309-CESTAT-DEL

Bridge And Roof Company (I) Ltd Vs CCE

ST - From January, 2007 assessee discharged Service Tax under category of Commercial or Industrial Construction Service - After introduction of 'Works Contract Service' w.e.f. 01/06/2007 they started paying Service Tax categorizing the service under Works Contract Service and availing composition rate as per Works Contract Rules, 2007 - Revenue objected to said payment on the ground that assessee cannot change the classification of service, midway - In terms of decision of Supreme Court in Larsen and Tubro, 2015-TIOL-187-SC-ST, composite Work Contract are not liable to Service Tax prior to 01/06/2007 as there was no machinery provision for identifying this service portion or for quantification of tax - Admittedly, assessee is liable to Service Tax for work executed in pursuance of impugned contract only w.e.f. 01/06/2007 as such any payment of Service Tax prior to 01/06/2007 will not bar the assessee from following the procedure as available under 2007 Rules - From the date of introduction of works contract service, assessee have started discharging service tax at the rate of 2 per cent availing procedure under 2007 Rules - The Tribunal in case of ABL Infrastructure Pvt. Ltd. 2015-TIOL-360-CESTAT-MUM held that when assessee started paying tax under Works Contract Service availing the Composition scheme and reflected rate in statutory returns ST-3 filed before the Department, same should satisfy the condition of exercising option - Following the ratio as mentioned in Tribunal's decision, assessee is entitled for Composition Scheme - It is also noted that assessee have not availed any credit on inputs which will bar them from availing the said scheme - Availing credit of input services is not barred by the scheme - Accordingly, objection against assessee availing the composition scheme is not sustainable - Impugned order set aside: CESTAT - Appeals allowed: DELHI CESTAT

2018-TIOL-308-CESTAT-HYD

Deloitte Support Services India Pvt Ltd Vs CC,CE & ST

ST - the assessee-company claimed to have exported Business Auxiliary Services, Management Consultant Services and Business Support Services - Thus it claimed refund of various amounts of unused Cenvat credit - The Department rejected the refund claims on limitation, holding that the claim was filed after one year of raising the invoices - The Revenue further claimed that the input services were not availed in relation to the output services -

Held - the Andhra Pradesh High Court in CESTAT Vs. Hyundai Motor India Engineering (P) Ltd. held that refund claims were within limitation, where filed within one year from date of Foreign Inward Remission Certificate - Since the assessee satisfied such condition, the refunds claimed are to be allowed - It is undisputed that the assessee exported services and the input services in question were received at their premises - Hence refund of tax paid on input services is to be allowed - Following the Tribunal decision in Commissioner of Service Tax, Bangalore and the Karnataka High Court decision in mPortal India Wireless Solutions Pvt. Ltd., the issue stands settled in favor of the assessee: CESTAT (Para 4,7,8,9,10) - Appeals Allowed: HYDERBAD CESTAT

CENTRAL EXCISE SECTION

2018-TIOL-139-HC- MUM-CX + Story

CCE Vs Loreal India Pvt Ltd

CX - Section 2(f) of CEA, 1944 - Tribunal held that excise duty is not payable in respect of the activity of labelling/affixing MRP on imported goods contained in packages of more than 10 gms/10ml as the activity is a statutory requirement before the goods are allowed to be cleared for home consumption - However, in respect of such activity undertaken on the goods contained in packages of 10 gms/10ml or less, Tribunal held that same amounts to ‘manufacture' and duty is payable as there is no statutory requirement of undertaking the said activity before import can be allowed; that as the entire activity was undertaken with the knowledge and permission of the Customs authorities, the allegation of suppression of facts does not sustain and the duty demand is sustainable only for the normal period of limitation; that no penalty is imposable as matter relates to interpretation of law relating to manufacture and valuation; that importer would be entitled to take CENVAT credit of CVD paid on such goods while discharging excise liability; matter remanded for recomputation of demand - Revenue in appeal before High Court. Held: Tribunal has not laid down any principle of law which could be termed as vitiated by an error apparent nor could its findings and conclusions particularly on the point of limitation can be said to be perverse - view taken that there is no suppression of facts by the assessee is based on the disclosures that have been made throughout to the Customs Authorities - appeal does not raise any substantial question of law - Revenue appeal dismissed: High Court [para 6] - Appeal dismissed: BOMBAY HIGH COURT

2018-TIOL-307-CESTAT-MUM

Jsw Steel (Salav) Ltd Vs CCE

CX - Input Service - Rule 2(l) of CCR, 2004 - Pest Control Service is related to the factory of appellant wherein statutory records are maintained - Therefore, for the said service, after 01.04.2011 also, the appellant is entitled to avail CENVAT credit - Impugned order set aside and appeal allowed with consequential relief: CESTAT [para 3, 4] - Appeal allowed: MUMBAI CESTAT

2018-TIOL-306-CESTAT-MUM

Mahanagar Gas Ltd Vs CCE

CX - Refund - Appellant engaged in supplying gas to various oil marketing companies - Trade discount was revised with retrospective effect and as a result the appellants are seeking re-valuation of the assessable value of the goods and consequent refund.

Held: Variation of the transaction value on a subsequent date cannot result in re-determination of assessable value - If the appellant had any doubt regarding the finality of the transaction value at the time of clearance they should have adopted the method of provisional assessment - Refund is not admissible to the appellant - appeal is dismissed: CESTAT [para 5] - Appeal dismissed: MUMBAI CESTAT

2018-TIOL-305-CESTAT-MUM

CCE Vs MJ Biopharm Pvt Ltd

CX - Case of the Revenue is that as supplier was not supposed to pay duty on inputs but avail exemption in terms of Notification No. 44/2001-CE dated 26-6-2001, the respondent assessee was not eligible for availing CENVAT Credit of the Central Excise duty paid on such inputs - Commissioner(A) setting aside the order, therefore, Revenue in appeal.

Held: In terms of Rule 3 of the CCR, 2004 respondent is entitled to avail CENVAT credit of the duty paid on inputs - In the circumstances, CENVAT credit cannot be denied to the appellant - Revenue appeal dismissed: CESTAT [para 5] - Appeal dismissed: MUMBAI CESTAT

2018-TIOL-304-CESTAT-MUM

CCE Vs Padmavati Enterprises Pvt Ltd

CX - Adjudicating authority dropped the proceeding of the show-cause notice on the ground that the respondent is not the manufacturer of Goa Gutka but they are the bonafide purchaser of the goods under the cover of the document - Commissioner(A) rejecting Revenue appeal, therefore, appeal before CESTAT.

Held: As per the facts of the case these goods were initially purchased by M/s Hari Om Enterprises, Kalyan from M/s Royal Marwar Tobacco Products, Gandhinagar and M/s Raneja Food Products, Rajasthan - Since M/s Hari Om Enterprises had closed down his business, he sold the said bought out goods to M/s Shree Meenakshi Foods Pvt. Ltd. under the cover of invoice - Subsequently, M/s Shree Meenakshi Foods Pvt. Ltd., Gandhinagar sold the goods to M/s Padmavati Enterprises Pvt. Ltd. under cover of invoices -this transaction was endorsed by Shri Babulal Jain, Director of M/s Padmavati Enterprises Pvt. Ltd. in his statements - Under this fact it is established that the respondent have purchased the goods in the market bonafidely, therefore, no duty can be demanded from the respondent who is not a manufacturer of Goa Gutka - Since he is the bonafide buyer of the goods, the goods is also not liable to confiscation - contention of the Revenue that the goods are non-duty paid and will render the respondent liable for payment of duty is not tenable - irrespective of the fact whether the subject goods were cleared on payment of duty or otherwise, the duty demand proposed on the respondent being a non-manufacturer and merely a trader, is not sustainable and so are the consequential punishments - no infirmity in the order of the lower authorities - Revenue appeals dismissed: CESTAT [para 4] - Appeals dismissed: MUMBAI CESTAT

2018-TIOL-303-CESTAT-CHD

Harman Bawa Pvt Ltd Vs CCE & ST

CX - Assessee is manufacturing Insulating Varnish in packages of 5Kgs, 25Kgs and 205Kgs and affixing MRP thereon - They are paying duty on said goods under Section 4A of CEA, 1944 - It is also a fact that assessee is clearing some goods to industrial consumers on which there is no marking that these goods are meant for industrial consumers but the MRP is affixed on those goods - A SCN was issued to assessee by invoking extended period of limitation on the ground that as assessee is not required to affixed MRP on the clearances made to industrial consumers, therefore, they are required to pay duty under Section 4 of CEA, 1944 on transaction value to demand differential duty along with interest and imposed penalty - There is no allegation that at the time of manufacturing, assessee was knowing that goods are meant for industrial consumers - There is no marking on containers that goods are meant for industrial use - Therefore, assessee is not entitled for exemption under Rule 34 of said Rules - The said issue has been dealt by Tribunal in case of H&R Johnson (India) Ltd. 2014-TIOL-845-CESTAT-MUM and Nitco Tiles 2014-TIOL-2092-CESTAT-MUM - Relying on said judicial analysis by this Tribunal, assessee is not required to pay duty under Section 4 of the Act and they have correctly paid the duty under Section 4A i.e. the MRP less abatement, therefore, no merit found in the impugned order.

On limitation, it is clear that at the time of manufacturing of goods, it was not known to assessee that whether these goods meant for the industrial consumers or for retail sale - In that circumstances, suppression is absent from the facts of the case, therefore, extended period of limitation is not invokable in this case - Further, as the demands has been raised by invoking extended period of limitation, therefore, demand is not sustainable as same is barred by limitation: CESTAT - Appeal allowed: CHANDIGARH CESTAT

CUSTOMS SECTION

2018-TIOL-145-HC-MUM-CUS + Story

Sony India Pvt Ltd Vs UoI

Cus - Show cause notice was issued and that, as a whole, went for settlement before the Settlement Commission - Once the dispute or the issues were settled by the Commission in terms of the order and with the operative directions, which only granted or reserved a limited liberty in the Revenue, then, in the facts and circumstances of this case, there is no justification for the Revenue now demanding interest on the differential duty - Everything that was payable, including duty and interest, is subsumed in the order of the Commission - Revenue is alone to be blamed as it has not raised the contentions in the affidavit-in-reply or in the communication to the Settlement Commission during the proceedings or post its final order - Revenue must blame itself if it has not conducted the proceedings before the Commission in the manner demanded by the statute or its report or its conduct of the proceedings was deficient in any manner - final order of Settlement Commission is not challenged by the Revenue in substantive proceedings, therefore, it cannot now issue a letter demanding interest on the differential duty of Rs.79,65,52,147/- on the provisionally assessed 187 bills of entry in terms of section 18(3) of the Customs Act, 1962 - impugned letter dated 10th April, 2017 is quashed and the Revenue is commanded not to act in furtherance thereof - Petition allowed: High Court [para 34 to 37] - Petition allowed : BOMBAY HIGH COURT

2018-TIOL-140-HC- MUM-CUS + Story

Central Electronics Ltd Vs UoI

Cus - Unsatisfactory state of affairs in PSU - Order-in-Original of 2003 not challenged on the ground that it is the arm of the Government of India - Recovery proceedings initiated in August 2017 - Petition filed seeking quashing of order/letter Held: If the financial position of PSU is precarious, it could not have held back the dues and which were legitimate, due and payable in terms of an order - request for fresh adjudication into the same SCN - petitioner to pay the differential duty within a period of three months and report complaince, pursuant to which the SCN would be adjudicated afresh on merits; that for the period of three months the respondent shall hold the recovery proceedings in abeyance - clarified that order is not to be treated as a precedent even for a PSU - In the event no compliance is reported within this period, then, at the end thereof, the respondents can recover all outstanding sums by coercive means - Petition disposed of: High Court [para 10, 12, 13] - Petition disposed of: BOMBAY HIGH COURT

2018-TIOL-302-CESTAT-MUM

Jain Irrigation Systems Ltd Vs CC

Cus - Appellant imported various types of ACC Decoder, Single-station Decoder, Remote and Single-station battery powered Decoder and declared the same as equipment for irrigationclassifiable under sub-heading 8424 8100 and claimed consequent exemption from payment of duty - department, however, has considered the goods to be automatic regulating or controlling instruments and apparatus classifiable under sub-heading 9032 8900 and demanded customs duty - appeal to CESTAT.

Held: There is no Note either in Chapter 90 or in Section XVIII (which contains the Chapter 90) excluding articles of Ch. 84 - Accordingly, the primacy of the latter heading should prevail - department has rightly classified the goods under SH 9032 8990 - in the absence of any case law or authority controverting the position, impugned order upheld - appeal dismissed: CESTAT [para 5, 6] - Appeal dismissed: MUMBAI CESTAT

2018-TIOL-301-CESTAT-ALL

Arora Aromatics Vs CCE

Cus - The issue in this appeal by assessee, manufacturer of Menthol Crystal, Dementholized Peppermint Oil, Menthol Crystal and Peppermint Oil is; whether the Customs Authority has power to cancel the registration of DEPB, as it appeared to them that the goods exported by assessee were not covered under Standard Input Output Norms (SION) and as per Foreign Trade Policy and thus DEPB credit for exported goods appeared to be not admissible to them - Further, whether pursuant to cancellation of registration, the duty has been rightly levied with interest along with imposition of penalty - Issue is no longer res-integra in view of ruling of Division Bench of Tribunal in case of Alphonse Joseph 2007-TIOL-02-CESTAT-BANG, wherein it was held that Customs Authorities are bound to inform the DGFT Authorities to take necessary action for recovery of excess credit - The power to determine and modify DEPB credit vests only with DGFT Authorities - Customs Authorities duty is to verify the exporter's declaration, quantity and value of export products - Only DGFT decides to grant credit, the Customs Authorities cannot modify the credit - As per Government policy, the jurisdiction to initiate recovery of excess credit or wrong credit lies with the DGFT - Accordingly, impugned order set aside, so far, it confirms the demand of Customs duty - Cancellation of registration of DEPB Credit by the Customs authorities set aside: CESTAT - Appeal allowed: ALLAHABAD CESTAT

MISC CASES

2018-TIOL-138-HC- KERALA-VAT

V K Cement And Steels Vs State Of Kerala

Whether the Assessee is eligible for the benefit of the first proviso to Section 16(2) for claiming input tax credit from the date of commencement of business - NO: HC - Revision appeal answered against Assessee: KERALA HIGH COURT

2018-TIOL-137-HC-MUM-VAT

Benzayan Fuel And Lubes Vs VAT

Whether appellate authority can be considered as the last fact finding authority in order to examine whether the assessment is correctly framed by providing opportunity of being heard to the assessee - YES: HC - Case disposed of: BOMBAY HIGH COURT

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